Listed below is the prospectus for a CNL Securities distributed product.
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 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 standards. See the Suitability Standards section of the prospectus for complete details.
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.
Distributions are at the discretion of the board of directors and are not guaranteed in frequency or amount. Initially, distributions will be paid from net investment income, fee waivers or deferrals, offering proceeds, borrowings or expense support. 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.
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.
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, 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.
An investment in CNL Strategic Capital does not provide investors with a direct ownership interest in the underlying businesses.
Please read the prospectus, including the Risk Factors section, for full details.
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 speak with your financial advisor regarding what share class may be best for your investment strategy.
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