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CNL Strategic Capital

CNL Strategic Capital

CNL Strategic Capital, a direct participation program, allows investors the opportunity to consider an investment strategy that seeks to provide debt and equity capital to growing and durable, privately owned U.S. companies.

This investment is designed for investors who are looking to potentially:

  • Diversify their portfolio by accessing the private company asset class - an investment category not readily available to all investors.1
  • Invest for long-term growth.
  • Find alternative forms of income.

This investment is speculative, has substantial costs, and an investor must meet suitability standards prior to investing.

CNL Strategic Capital
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CNL Strategic Capital Information
Investment Structure A limited liability company, regulated as a direct participation program
Maximum Offering Size Up to $1.1 billion
Minimum Investment $5,000
Share Pricing Frequency2 Monthly
Published Net Asset Value (NAV) Monthly
Share Subscription Procedure Weekly escrow sweep
Geographic Focus United States, with the opportunity for limited international investments
Investment Objective Long-term growth and income
Distributions3 Declared weekly and paid monthly
Limited Share Repurchase Program4 Once implemented, quarterly share repurchases will be at the prior month’s NAV for each share class
Tax Reporting Schedule K-1
Exit Strategy While there are no assurances regarding the timing of a liquidity event, the board of directors intends to consider liquidity event options within six years from the termination of the public offering. Shares should only be purchased as a long-term investment. 
Financial Suitability Standards $250,000 net worth or $70,000 net worth and $70,000 annual gross income (excluding home, home furnishings and personal automobiles). Some states may have additional standards. These states include, but are not limited to, AL, CA, IA, ID, KS, KY, MA, ME, MO, ND, NE, NJ, NM, OH, OK, OR, PA, TN and VT. See the Suitability Standards section of the prospectus.

There is no assurance these objectives will be met. CNL Strategic Capital pays substantial fees and expenses, which will reduce the amount of cash available for acquisitions or distributions to shareholders. Read the prospectus for complete details on the risks, fees and expenses.

CNL Strategic Capital is managed by CNL Strategic Capital Management, LLC and sub-managed by Levine Leichtman Strategic Capital, LLC (LL), each an investment advisor registered with the U.S. Securities and Exchange Commission, affiliates of CNL Financial Group and Levine Leichtman Capital Partners, respectively. The performance of CNL Strategic Capital may not replicate the success of those entities.

1 Diversification does not ensure profit nor protect against loss in a positive or declining market. There is no guarantee that any investment will achieve its objectives, generate profits or avoid losses. CNL Strategic Capital may not be able to acquire more than a limited number of businesses. These additional risks may hinder CNL Strategic Capital’s ability to achieve an investor’s personal investment objectives related to portfolio diversification, risk-adjusted returns and other objectives.
2 The offering price will be adjusted monthly, in connection with the valuation, to ensure shares are sold at a value that, after deducting commissions and dealer manager fees, is equal to NAV.
3 Distributions are at the discretion of the board of directors and are not guaranteed in frequency or amount. In the early stages, distributions will be paid from cash from operations, offering proceeds, borrowings or cash resulting from expense support from the managers. CNL Strategic Capital is obligated to repay expense support to the managers over several years, reducing future distributions and potentially diluting value for future shareholders.
4 Beginning no later than March 2019, and at the discretion of the board of directors, CNL Strategic Capital intends to commence a limited share repurchase program. The total amount will be limited to 2.5 percent of the aggregate net asset value per calendar quarter and 10 percent of the aggregate net asset value per calendar year. There will be numerous restrictions that limit an investor’s ability to sell their shares. Unless the board of directors approves otherwise, quarterly share repurchases will be limited to proceeds received from the distribution reinvestment plan during the prior quarter. The share repurchase program may be suspended, modified or terminated by the board of directors at any time.

RISK FACTORS

An investment in CNL Strategic Capital, LLC  is considered speculative and involves a high degree of risk, including the loss of all or a substantial amount of investment. CNL Strategic Capital is not a short-term investment and requires investors to meet the minimum suitability standards.

CNL Strategic Capital is a recently formed entity that has no operating history. It may be unable to successfully implement its business and acquisition strategies or meet its investment objectives. This will initially be a blind pool offering, and investors will not have the opportunity to evaluate businesses prior to acquisition.

Investors should not rely on the past performance of the managers and their respective affiliates as an indication of future success. CNL Strategic Capital is a different investment vehicle with  fees and risks dissimilar to the managers other funds.

CNL Strategic Capital’s managers, and their respective affiliates, face conflicts of interest including those that result from compensation arrangements and allocations of business opportunities, which may result in actions that are not in the best interest of shareholders.

This is a “best efforts” offering and there is no assurance that CNL Strategic Capital will raise substantial funds. If CNL Strategic Capital is unable to raise substantial funds, it will be limited in the number of businesses it acquires, which reduces diversification and increases the potential for volatility.

CNL Strategic Capital faces certain risks and costs with respect to the evaluation and management of future business acquisitions.

Co-investing with other investment groups may increase the risk that third parties may make decisions with which CNL Strategic Capital does not fully agree. In certain cases, CNL Strategic Capital will invest alongside the sub-managers’ affiliates or other clients. CNL Strategic Capital will not purchase these businesses unless a majority of the independent directors determines the transaction is fair and reasonable.

Subject to certain exceptions, CNL Strategic Capital may use leverage in an amount not to exceed 50 percent of its gross assets, subjecting it to inflation and interest rate risk. Leverage can magnify the potential for loss or gain, which can impact an investment’s volatility and returns.

The board of directors will determine the net asset value (NAV) per share of each applicable class on a monthly basis. Asset valuations will be fair value estimates dependent on market conditions and do not represent the amount an investor would receive now or at any time in the future.

An investment in CNL Strategic Capital is illiquid and no secondary market is expected to develop. Shares sold in this offering will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever. Investors will have limited liquidity. If investors are able to sell their shares, they will likely receive less than their purchase price.

If CNL Strategic Capital were to become taxable as a corporation for U.S. federal income tax purposes, it would be required to pay income tax at corporate rates on its net income. Distributions by CNL Strategic Capital to shareholders would then constitute dividend income taxable to such shareholders.

Please read the prospectus, including the Risk Factors section, for full details.

GENERAL NOTICES

This is not an offer to sell nor a solicitation of an offer to buy shares of CNL Strategic Capital. Only the prospectus makes such an offer. This piece must be read in conjunction with the prospectus in order to understand fully all the objectives, risks, charges and expenses associated with an investment and must not be relied upon to make a decision. The information herein does not supplement or revise any information in CNL Strategic Capital’s public filings. To the extent information herein conflicts with the prospectus, the information in the prospectus shall govern.

Managing dealer of CNL Strategic Capital is CNL Securities Corp., member FINRA/SIPC. Shares are offered to the public through other broker-dealers or with the assistance of registered investment advisors. Broker-dealers and investment advisors are reminded that CNL Strategic Capital’s communications must be accompanied or preceded by a prospectus.

Forward-looking statements are based on current expectations and may be identified by words such as believes, anticipates, expects, may, will, continues, could, targeted and terms of similar substance, and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the offering’s ability to control or accurately predict. Investors and financial advisors should not place undue reliance on any forward-looking statements.

The information contained herein is not to be construed as tax or legal advice. Investors should discuss the tax risks associated with this offering with their tax professional.

View the Prospectus

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