CNL Strategic Capital
CNL Strategic Capital is a company that owns private companies and seeks to provide long-term growth and monthly income by offering:
- First-time access to this private equity strategy, historically limited to large institutional investors1
- The potential for meaningful returns outside of publicly traded markets
- An experienced management team: CNL Financial Group, an investment management firm with over 45 years of history, and Levine Leichtman Capital Partners, an institutional asset manager with 35+ years of history1
This investment is speculative, has substantial costs, and differs from traditional private equity. Distributions are not guaranteed in frequency or amount. Distributions will be paid from net investment income and, in addition, may be paid from offering proceeds, borrowings, or reimbursable expense support; which will reduce future cash available for distributions and be dilutive to future shareholders.
|CNL Strategic Capital Information|
|Unique Investment Structure||A limited liability company, regulated as a direct participation program, taxed as a partnership|
|Investor Profile||Individual and institutional investors|
|Maximum Offering Size||Up to $1.1 billion|
|Share Pricing Frequency2||Monthly|
|Published Net Asset Value (NAV)||Monthly|
|Share Subscription Procedure||Monthly escrow sweep|
|Geographic Focus||Primarily in the United States|
|Investment Objective||Long-term appreciation with current income, while protecting invested capital. Distributions not guaranteed in frequency or amount. Distributions will be paid from net investment income and, in addition, may be paid from offering proceeds, borrowings, or reimbursable expense support; which will reduce future cash available for distributions and be dilutive to future shareholders.|
|Distributions3||Declared and paid monthly. Sources of funds for distribution varies. Distributions are not guaranteed in frequency or amount.|
|Limited Share Repurchase Program4||Quarterly share repurchase program is based on net asset value. There will be numerous restrictions that limit an investor’s ability to sell their shares. The board of directors may suspend or modify the program at any time.|
|Tax Reporting||One consolidated Schedule K-1; best efforts to provide no later than mid-March|
|Exit Strategy5||The board of directors intends to consider a liquidity event for our shareholders on or before Nov. 1, 2027 (which is within six years from the date we terminated our initial public offering). The exit date can vary. Shares should only be purchased as a long-term investment.|
|Financial Suitability Standards||See the Suitability Standards section of the prospectus or your firm's policies. Some states may have additional standards. These states include, AL, CA, IA, ID, KS, KY, MA, ME, MO, ND, NE, NJ, NM, OH, OK, OR, PA, PR, TN and VT.|
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, which are affiliates of CNL Financial Group and Levine Leichtman Capital Partners, respectively. Each managing entity is an investment adviser registered with the U.S. Securities and Exchange Commission. The performance of CNL Strategic Capital may not replicate the experience of these entities.
1 Institutional investors invest with strategies, terms and conditions different from those of individual investors, who typically have a shorter investment time horizon, possess lower risk capacity, greater liquidity needs and pay higher fees and expenses for retail offerings.
2 The offering price will be adjusted monthly, in connection with the valuation, so shares are sold at a value that, after deducting commissions and dealer manager fees, is equal to NAV.
3 Distributions paid are not solely based upon performance. Distributions are not guaranteed in frequency or amount. Distributions will be paid from net investment income, offering proceeds, borrowings or reimbursable expense support. Subject to certain conditions being met, CNL Strategic Capital is obligated to repay expense support over several years, which will reduce future cash available for distributions and be dilutive to future shareholders.
4 The share repurchase program offers redemptions limited to direct reinvestment program proceeds, or 2.5% of CNL Strategic Capital’s aggregate net asset value per calendar quarter and up to 10% of the aggregate net asset value for the prior four quarters. The board of directors may suspend or modify the program at any time; however, it cannot be terminated absent a liquidity event or unless otherwise required by law.
5 The board of directors is under no obligation to pursue or complete any particular liquidity event during this time frame or otherwise.
Please read the prospectus, including the Risk Factors section, for full details. The prospectus is available at sec.gov and cnlstrategiccapital.com, or may be obtained by calling 866-650-0650.
Offering Risk. 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 your investment. CNL Strategic Capital's offering is on a best-efforts basis. There is no guarantee that CNL Strategic Capital will raise sufficient funds; therefore, it may not be able to acquire targeted assets, which reduces diversification and increases the potential of volatility.
Investment Objective Risk. There is no assurance the investment strategy or objectives of CNL Strategic Capital will be achieved. Investors will not have the opportunity to evaluate businesses prior to acquisition. Inability to invest the net offering proceeds on acceptable terms, consistent with the business strategy and within the time frame contemplated by the offering may exist. CNL Strategic Capital may face risks with respect to the evaluation and management of future acquisitions.
Undue Reliance on Managers or Past Performance. CNL Strategic Capital Management, LLC is acting as the manager. The sub-manager is Levine Leichtman Strategic Capital, LLC, an affiliate of Levine Leichtman Capital Partners, LLC (LLCP). Each managing entity is an investment adviser registered with the U.S. Securities and Exchange Commission. Investors should not rely on the past performance of the managers and their respective affiliates as an indication of future performance. CNL Strategic Capital is a different investment vehicle with fees and risks dissimilar to the managers’ other funds and this is the first time the managers have partnered together.
Conflicts of Interest Risk. 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. See the prospectus for details. CNL Strategic Capital pays substantial fees and expenses to the Manager, the Sub-manager, the Managing Dealer or their respective affiliates. These payments increase the risk that investors will not earn a profit on their investment. Co-investing with other investment groups will 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-manager’s 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.
Use of Leverage Risk. CNL Strategic Capital’s strategy is to use leverage in an amount not to exceed 35% of its gross assets; however, CNL Strategic Capital may exceed the 35% at any time, if approved by a majority of its independent directors. Separate from the portfolio leverage, certain businesses in its portfolio may have third-party debt. The use of leverage and its limits is subject to change.
Valuation Risk. Asset valuations will be estimates of fair value, which is calculated from CNL Strategic Capital's financial statements prepared in accordance with GAAP, and do not represent the amount an investor would receive now or at any time in the future. CNL Strategic Capital’s estimate of fair value for the portfolio is inherently subjective, and the net asset value (NAV) may not accurately reflect the actual price at which its assets could be liquidated. The realized value of shares will be dependent upon market conditions that are beyond anyone’s ability to control or predict.
Liquidity Risk. An investment in CNL Strategic Capital is illiquid. Shares sold in this offering will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever. If investors are able to sell their shares, they will likely receive less than their purchase price. The share repurchase program has numerous restrictions and offers redemptions limited to direct reinvestment program proceeds, or 2.5% of CNL Strategic Capital’s aggregate NAV per calendar quarter and up to 10% of the aggregate net asset value for the prior four quarters. The board of directors may suspend or modify the program at any time; however, it cannot be terminated absent a liquidity event or unless otherwise required by law.
This is not an offer to sell nor a solicitation of an offer to purchase the securities described herein. Only the prospectus makes such an offer. This material should be read in conjunction with the prospectus in order to fully understand the investment objectives, risks and charges associated with an investment. Please read the prospectus for full details including more complete information on all of the risk factors.
This offering is not suitable for everyone; investors are expected to meet the minimum financial suitability standards which include, $250,000 net worth or $70,000 net worth and $70,000 annual gross income (excluding home furnishings and personal automobiles). Some states and broker-dealers may have additional suitability standards. See your firm’s policies and the Suitability Standards section of the prospectus for complete details. CNL Strategic Capital is not a short-term investment.
CNL Strategic Capital, LLC is a unique direct participation program, taxed as a partnership.
CNL Securities and its associates cannot provide investment advice for any individual or any individual situation and are not acting in a fiduciary capacity. Contact your financial professional to learn more about CNL product offerings and how they may complement and help diversify your portfolio. Investments should be chosen based on your individual objectives, risk tolerance and goals.
Neither the U.S. Securities and Exchange Commission, the Attorney General of the State of New York, nor any other state regulator has passed on or endorsed the merits of this offering. Any representation to the contrary is unlawful.