CNL Strategic Capital, a direct participation program, 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:
This investment is speculative, has substantial costs, and an investor must meet suitability standards prior to investing.
|CNL Strategic Capital Information|
|Investment Structure||A limited liability company, regulated as a direct participation program|
|Maximum Offering Size||Up to $1.1 billion|
|Net Asset Value (NAV)2||Class FA: $25.43
Class A: $25.37
Class T: $25.42
Class D: $25.41
Class I: $25.40
|Offering Price Per Share3||Class A: $27.73
Class T: $26.69
Class D: $25.41
Class I: $25.40
|Share Pricing Frequency3||Monthly|
|Published Net Asset Value (NAV)||Monthly|
|Share Subscription Procedure||Monthly escrow sweep|
|Geographic Focus||United States, with the opportunity for limited international investments|
|Investment Objective||Long-term growth and income|
|Distributions4||Declared weekly and paid monthly|
|Limited Share Repurchase Program5||Once implemented, quarterly share repurchases will be at the prior month’s NAV for each share class|
|Tax Reporting||Schedule K-1|
|Exit Strategy||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 the stated 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 (Levine Leichtman), each an investment advisor registered with the U.S. Securities and Exchange Commission and affiliates of CNL Financial Group and Levine Leichtman Capital Partners, respectively. The performance of CNL Strategic Capital may not replicate the experience of those entities. Although CNL Strategic Capital will be dependent on the performance of its managers, investors should not rely on this as an indication of future success.
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 businesses. Additional risks may hinder the ability to achieve portfolio diversification, risk-adjusted returns and other objectives.
2 Effective as of June 30, 2018. Asset valuations are fair value estimates dependent on market conditions and management opinions and do not represent the amount an investor would receive now or at any time in the future.
3 Effective as of the monthly sweep on July 31, 2018. 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.
4 Distributions declared as of June 20, 2018. Distributions in the chart above represent the weekly distribution amount. Distributions are at the discretion of the board of directors and are not guaranteed in frequency or amount. Due to the high levels of investment costs and fees incurred during the fund’s initial phase, distributions will not be fully covered by cash flows from operating activities. As of March 31, 2018, approximately 86 percent of distributions were funded from cash from operations and 14 percent were funded from offering proceeds and expense support for FA shares (the only outstanding share class at that time). CNL Strategic Capital is obligated to repay expense support to the managers over several years, which will reduce future distributions and dilute value for future shareholders.
5 Beginning no later than March 2019, and at the discretion of the board of directors, CNL Strategic Capital intends to commence a quarterly share repurchase program. If implemented, the total amount of aggregate repurchases 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, and will include numerous restrictions that limit an investor’s ability to sell their shares. The share repurchase program may be suspended, modified or terminated by the board of directors at any time.
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 investors are expected 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 management opinions, 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 increase expenses which will impact investors’ return.
Please read the prospectus, including the Risk Factors section, for full details.
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, member FINRA/SIPC. 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.
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