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|
|Unique 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: $27.56
Class A: $26.75
Class T: $26.82
Class D: $26.40
Class I: $26.99
|Offering Price Per Share4||Class A: $29.23
Class T: $28.16
Class D: $26.40
Class I: $26.99
|Share Pricing Frequency4||Monthly|
|Published Net Asset Value (NAV)||Monthly|
|Share Subscription Procedure||Monthly escrow sweep|
|Geographic Focus||United States|
|Investment Objective||Long-term growth and income|
|Distributions5||Declared and paid monthly. Sources of funds for distribution varies.|
|Limited Share Repurchase Program6||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.|
|Tax Reporting||One consolidated Schedule K-1; best efforts to provide no later than mid-March|
|Exit Strategy7||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||See the Suitability Standards section of the prospectus or your firm's requirements. Some states may have additional standards including, 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, 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 of Feb. 29, 2020. 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 March 23, 2020. 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 through March 16, 2020. Distributions are not guaranteed in frequency or amount. Distributions from sources other than income may lower overall returns and will be dilutive to later investors. CNL Strategic Capital is obligated to repay expense support to the managers over several years, which will reduce future income available for distributions. Distribution amounts and composition of coverage will vary among share classes and the actual fiscal year distribution composition will not be known until the audited Form 10-K is filed.
6 The share repurchase program offers redemptions limited to direct reinvestment program proceeds, or 2.5 percent of CNL Strategic Capital’s aggregate net asset value per calendar quarter and up to 10 percent of the aggregate net asset value for the prior four quarters. The program may be suspended, modified or terminated by the board of directors at any time.
7 The board of directors is under no obligation to pursue or complete any particular liquidity event during this time frame or otherwise.
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 is not a short-term investment. This offering is not suitable for everyone; investors are expected to meet the minimum financial suitability standards. Some states and broker-dealers may have additional standards. See your firm and the Suitability Standards section of the prospectus for complete details.
CNL Strategic Capital is a recently formed entity that has a limited operating history. It may be unable to successfully implement its business and acquisition strategies or meet its investment objectives. 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 performance. 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. If CNL Strategic Capital is unable to raise substantially more 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 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.
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 are not acting in a fiduciary capacity. Please speak with your financial advisor regarding what share class may be best for you economically and for your investment strategy.
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.
This information is not tax or legal advice. Investors should discuss the tax risks associated with this offering with their personal tax professional.
Please read the prospectus, including the Risk Factors section, for full details
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