Pension investment helps grow LI company

The New York State pension fund invested $3.6 million in a Great Neck-based manufacturer of industrial electrical switches, State Comptroller Thomas DiNapoli announced Wednesday.

The common retirement fund's investment in PACS Industries was matched by DeltaPoint Capital Management, a Rochester-based partner in a $978-million program that invests in New York companies.

"PACS Industries is a perfect example of how we can do well for the members of the retirement system, for the taxpayers of New York, while doing good for New York businesses and the New York economy," DiNapoli said at a news conference at the company's headquarters.

The firm designs and manufactures custom arc resistant switchgears that are similar to a home circuit breakers but on a much larger scale: their switchgears can handle up to 38,000 volts of electricity compared to a 120-volt home circuit breaker. PACS' switchgears have been installed in the Mets' Citi Field baseball stadium and its clients have included Amtrak, General Electric and Exxon, said company president and chief executive Bruce Dalis, 55.

Manny Dalis, Bruce's father, started the company in his bedroom in 1972 with a $35,000 loan from a family member. Today it has more than 100 employees at its headquarters in Great Neck and manufacturing plant in Mount Vernon, Ohio. It has annual sales of more than $20 million, Bruce Dalis said.

The company plans to use the combined $7.2-million equity investment for research and development and to acquire other similar companies "that will give us greater presence in the railroad industry," he said.

Since 2000, the pension fund has invested $554 million in 176 companies under its in-state private equity program. The state's investments have helped those companies raise an additional $4 billion, he said. The pension fund currently has $424 million available to invest in New York companies or companies looking to move to the state.

"If you're prepared to make a commitment to New York and can state a compelling case for our investment, we'll make a commitment to you and to your business," DiNapoli said.

Though some states permit pension funds to make local investments, they don't account for a large portion of portfolios, said Keith Brainard, research director for the National Association of State Retirement Administrators, a nonprofit association representing state and local retirement systems. Such investments are OK as long as the primary consideration is meeting risk and return criteria, he said.

"The priority has to be the prudence of the investment considering its risk, expected return in the context of the full portfolio, and regional economic considerations generally are not part of that," Brainard said.

New York's pension fund's value increased to an estimated $140.63 billion in the third quarter of last year, up $7.8 billion over the previous quarter.