CNL Strategic Capital is a company that owns private companies and seeks to provide long-term growth and monthly income by offering:
This investment is speculative, has substantial costs, and differs from traditional private equity.
|CNL Strategic Capital Information|
|Investment Structure||A limited liability company, regulated as a direct participation program, taxed as a partnership|
|Investment Profile||Retail and institutional investors|
|Maximum Offering Size||Up to $1.1 billion|
|Net Asset Value (NAV)3||Class FA: $26.72
Class A: $26.39
Class T: $26.50
Class D: $26.17
Class I: $26.54
|Offering Price Per Share4||Class A: $28.84
Class T: $27.82
Class D: $26.17
Class I: $26.54
|Share Pricing Frequency4||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|
|Distributions5||Declared and paid monthly|
|Limited Share Repurchase Program||Around March 2019, and at the discretion of the board of directors, CNL Strategic Capital intends to commence a quarterly share repurchase program. If implemented, there will be 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.|
|Tax Reporting||One consolidated Schedule K-1; best efforts to provide no later than mid-March|
|Exit Strategy||The board of directors intends to consider liquidity event options within six years from the termination of the public offering. The exit date can vary. 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, PR, 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 these 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. Prior to this offering, affiliates of CNL have only sponsored real estate and credit investment programs.
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, have greater liquidity needs and pay higher fees and expenses for retail offerings.
2 CNL Strategic Capital commenced in April 2018, has a limited operating history and this is the first offering where CNL and LLCP have managed an investment portfolio together
3 Effective as March 31, 2019. Asset valuations will be estimates of fair value and do not represent the amount an investor would receive now or at any time in the future. CNL Strategic Capital’s valuation is inherently subjective, and the 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.
4 Effective as of April 26, 2019. 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.
5 Distributions declared as of April 18, 2019. Distributions are not guaranteed in frequency or amount. There can be no assurance that the stated distribution rate will be achieved and does not represent the total return of CNL Strategic Capital. The annualized distribution rates shown are calculated per share class by annualizing the current weekly cash distributions declared per share class and divided by the public offering price (POP) per share (FA share class is divided by NAV). As of Sept. 30, 2018, approximately 97.5 percent of total distributions declared were sourced from net investment income with the remaining 2.5 percent sourced from offering proceeds. Net investment income includes 17.7 percent reimbursable expense support as a source for total distributions. Distribution amounts and composition of coverage will vary among share classes and the actual distribution composition will not be known until the audited Form 10K is filed. CNL Strategic Capital is obligated to repay expense support to the managers over several years, which will reduce future income available for distributions; distributions from sources other than operating income may lower overall returns.
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 financial suitability standards.
CNL Strategic Capital is a recently formed entity that has limited 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.
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.
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-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.
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.
Asset valuations will be estimates of fair value and do not represent the amount an investor would receive now or at any time in the future. CNL Strategic Capital’s valuation is inherently subjective, and the 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.
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. If investors are able to sell their shares, they will likely receive less than their purchase price.
Broker-dealers and investment advisors are reminded that CNL Strategic Capital’s communications must be accompanied or preceded by a prospectus. CNL Strategic Capital, LLC is a unique direct participation program (DPP), taxed as a partnership. CNL Securities and its associates cannot provide investment advice for any individual or any individual situation, and is not acting in a fiduciary capacity.
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.
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.
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. CNL Strategic Capital undertakes no obligation to publicly update or revise 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.
Please read the prospectus, including the Risk Factors section, for full details
© 2019 CNL Securities Corp.| All Rights Reserved.
CNL® and the Squares Within Squares design trademarks are used under license from CNL Intellectual Properties, LLC.