Blog - Alternative.Investments

Carlyle Group’s Alternative Investment Strategy

Carlyle Group is a global investment firm that focuses on alternative investments such as private equity, real estate, credit, and infrastructure. The firm’s alternative investments strategy involves identifying high-potential assets and adding value through operational improvements, with the aim of selling those assets for a profit. Carlyle Group has a total of $376 billion in AUM as of 3/1/2023.

Recently, Carlyle has been expanding its focus to include retail investors, with the launch of a retail platform called “Carlyle Access.” This platform enables individual investors to invest in private equity funds with lower minimum investment amounts. It also provides access to a range of alternative investment strategies, including real estate, credit, and infrastructure.

Carlyle’s alternative investments strategy aims to provide investors with access to high-quality assets that aren’t available through traditional public markets. By targeting assets with potential for operational improvement, Carlyle seeks to generate attractive returns for investors over the long term. Retail investors have become increasingly interested in alternative investments. As we’ve noted before, Private Markets are Going Mainstream.

The recent move towards retail investors through Carlyle Access is an important strategic shift for the firm.

Carlyle Group Alternative Investment Funds

Carlyle Group has several publicly filing alternative investment products available for high net worth retail investors. Here are a few examples:

Fund	Structure	Strategy	Net Assets (12/31/2022)
Carlyle Tactical Private Credit Fund	Interval Fund	Liquid credit (10%-20%), direct lending (25%-35%), opportunistic credit(35%-45%), loans and structured credit (10%-15%), distressed credit (0%-10%)	$1,409,238,155
Carlyle AlpInvest Private Markets Fund	Tender Offer Fund	Private equity investments, including direct investments in private companies, private and secondary purchases of PE funds	Recently Launched, no assets reported yet
CPG Carlyle Commitments Master Fund*	Tender Offer Fund	Invest in private equity funds sponsored by or associated with Carlyle Group	$1,164,775,429
Carlyle Credit Solutions, Inc.	Private NT BDC	Senior secured credit investments in stable companies with positive cash flow	$1,151,501,000
Carlyle Secured Lending III	Private NT BDC	Middle market debt, below investment grade and unrated	$109,672,287

For more detailed info on non-traded BDCS, Interval Funds, and Tender Offer funds check out the Tools and Data Page.

Understanding the Franklin Templeton Alternative Investment Strategy

Franklin Templeton has long been a mutual fund powerhouse. However, they have also quietly become one of the biggest players in the alternative investments industry. Strategic M&A and educational initiatives helped Franklin Templeton alternative investment products gain traction in the RIA channel. Franklin Templeton’s strategic focus on alternative investments is just beginning to have an industry impact.

Acquisitions

Franklin Tempelton has a history of maintaining a conservative balance sheet and a large cash reserve. Under the leadership of Jenny Johnson, they have used this cash reserve to make large strategic acquisitions. Franklin Temleton’s AUM has grown from ~$700 billion in 2018 to almost $1.4 trillion by the end of 2022. Several of the largest acquisitions were in the alternative investments sector, especially private credit.

In 2019, Franklin Templton acquired Benefit Street, a private credit manager with expertise in the U.S. middle market. Consequently, Franklin Templeton became manager of one of the longest running public non-traded BDCS: Franklin BSP Lending Corp(f/k/a Business Development Corporation of America). In 2020, they launched a new private BDC: the Franklin BSP Capital Corp. In October 2022, they launched a new interval fund: the Franklin BSP Private Credit Fund.

Franklin Templeton bought Legg Mason for $6.5 billion in 2020, just as Covid was breaking out, wreaking havoc on global supply chains and financial markets. Critics accused them of paying too much. Its too early to determine if this will be a successful acquisition, but it clearly unlocked expanded their alternatives capabilities, and opened a lot of growth opportunities for their firm. The Legg Mason platform includes several different affiliates with different processes areas of expertise. Franklin Tempelton is allowing them to operate autonomously. One of Legg Mason’s subsidiaries is Clarion, which manages the Clarion Partners Real Estate Fund, a tender offer fund.

In November 2021 they acquired Lexington Partners, one of the private equity firms with a focus on secondary PE investments. They currently have a $14 billion flagship global secondary fund, a $2.7 billion middle market secondary fund, ad $3.2 billion co-investment vehicle.

In November 2022, Franklin Templeton completed its acquisition of BNY Alcentra. This acquisition expanded their private credit capabilities. Alcentra has unique expertise in European private credit. This will give Franklin Templeton management of several retail credit vehicles, including BNY Mellon Alcentra Global Credit Fund a tender offer fund.

Franklin Alternative Investments Education

Surveys frequently reveal that a lack of education is a major barrier to advisers that are looking to offer more alternative investment products. Fund managers that fill this educational gap will have a major strategic advantage. For example, Blackstone offers an “Intro To Alternatives” online video series. Several other products sponsors will offer educational products.

Franklin Templeton has recently increased its efforts focused on alternative investments. For example, in November 2022, In November, the Franklin Templeton Academy announced the launch of its alternative education program as part of our ongoing effort to build knowledge and proficiency around the alternative investment landscape.

According to a recent earnings call:

The program offers a comprehensive curriculum on various types of alternatives, including courses on private equity, real estate, private credit, infrastructure and hedge strategies.

Coursework on alternative investments that the FT Academy offers is eligible for credit toward Certified Financial Planner® (CFP®), Chartered Institute of Management Accountants® (CIMA®), Retirement Management Advisor® (RMA®) and Certified Private Wealth Advisor® (CPWA®) certifications and offered at no cost to the learner.

Educational opportunities lay the groundwork for a strong product distribution network. Closely related, Franklin Templeton has recently expanded its partnership drive with CAIS, and announced a new partnership with iCapital.

Distribution

Franklin Templeton has a strong distribution network for traditional mutual funds that it built out over over half a century. However, they only recently started to ramp up their distribution team for alternative investment products. On the 2022Q4 earnings call, Franklin Templeton management mentioned that they created a dedicated distribution team to cover alternative investment products in the wealth management channel.

This table shows some of the most notable retail alternative products that Franklin Templeton is currently offering .

Fund	Structure	Strategy	AUM(millions)
Franklin BSP Capital Corp	Private BDC	First and second lien senior secured loans of private middle market companies	$778
Franklin BSP Lending Corp(f/k/a Business Development Corp of America)	Public NT BDC	Senior secured loans of private middle market US companies.	2,876
Franklin BSP Private Credit Fund	Interval Fund	Private credit investments in middle market companies	Launched 2022Q4, no assets reported yet
Clarion Partners Real Estate Income Fund	Tender Offer Fund	Private commercial real estate and publicly traded real estate securities	$525
BNY Alcentra Global Multi-Strategy Credit Fund, Inc.	Tender Offer Fund	Credit instruments including senior secured loans, CLOs, structured products, etc.	$265

Several of these products are starting to gain major traction in the RIA channel.

Free tools and data for the alternative investments industry:

The Reemergence of Non-traded REITs

Total non-traded REIT (NT REIT) assets were $232 billion as of the end of 2022Q2, up 76% compared to a year ago. This recent growth has been led by Blackstone, which has come to dominate the sector. Yet several other major asset managers have launched new funds, indicating that the NT REIT is becoming a mainstream institutional product. This year is on track to be first year since 2016 that new NT REIT launches exceed exits.

The NT REIT sector survived three major existential threats in the past decade. First, in 2014, an accounting scandal at the REIT then known as American Realty Capital Properties brought fundraising down across the entire sector. Second, in April 2016 new FINRA 15-02 went into effect, bringing heightened scrutiny on the impact of up front selling costs. Industry participants scrambled to develop share class structures that would blunt the perceived impact, with limited success. Finally, in April 2016, The Department of Labor issued a new fiduciary standard that would have made it nearly impossible to justify high commission products like NT REITs. Although courts overturned this rule, the uncertainty it caused stymied NT REIT fundraising for several years.

Yet NT REITs survived these challenges and reemerged in a new form. In this paper we take a deep dive into the structural changes that have occurred in the NT REIT sector over the past decade. Then we look to the future and consider what the NT REIT sector will become.

Note: This is an excerpt adapted from a The Reemergence of Non-traded BDCs, a research report available to Alternative Investments Pro Members. Click here to sign up and access the full report. Already a member? Click here to login and access the content.

See also:

What is a non-traded REIT?

List of current non-traded REITs with current assets

PGIM Registers Non-traded BDC

On November 1, PGIM filed a registration statement for a new perpetual life non-traded BDC: PGIM Private Credit Fund. PGIM, formerly known as Prudential Investment Management, has been expanding its alternative investment lineup in recent years. In this article we provide a preview of PGIM’s new NT BDC, and its alternative investment business strategy.

PGIM Private Credit Fund Strategy

According to its draft registration statement PGIM Private Credit fund will invest primarily in privately placed floating rate leveraged debt, including senior secured, first lien ,debt issuances in middle market companies primarily in the US. It will focus on middle market companies that the manager believes to be more differentiated and less competitive with the broader capital markets.

PGIM Private Credit Fund Share Classes and Fund Structure

PGIM’s non-traded BDC is doing a public offering and will have three share classes: S, D and I. The minimum initial investment for Class S and Class D shares will be $2,500. The minimum initial investment for Class I shares is $1,000,000. Class S and Class D shares will have up front sales charges and shareholder servicing fees, although the exact amount is not specified in the draft registration statement. The prospectus language describing the share class structure is very similar to other public perpetual life BDCs offered by major asset managers such as Oaktree Strategic Credit Fund.

The base management fee and incentive fee levels are also left blank in the draft prospectus. To access detailed a comprehensive dataset covering non-traded BDC fees sign up for a Pro Membership.

About PGIM

PGIM has approximately $1.3 trillion in assets under management, including $267 billion in alternative investment strategies. According to their website they have over 200 client relationships that have lasted over 20 years. In August 2022, PGIM launched the PGIM Private Real Estate Fund, a non-traded REIT/Tender Offer Fund hybrid.

Non-traded BDC pipeline show big changes are coming

BDCs assets have have surged in the past year. Will the growth continue?

For now, the structural changes in the broader macroeconomy and the investment management industry that have driven NT BDC asset growth are still in motion. Moreover, the pipeline of recently launched, and soon to launched funds supports the idea that the recent growth will continue and may even accelerate in the next year. Eighteen NT BDCs have launched so far in 2022, including thirteen private funds, and five public funds.

The details of these new launches also hint at the potential magnitude of coming growth for NT BDC assets.

Change is Coming

More traditional asset managers have continued to enter the NT BDC market. So far in 2022 Pimco, Fidelity, and T Rowe Price have all made initial filings for non-traded BDCs. These firms will all benefit from established distribution networks, and brand names that are familiar to financial advisors. Moreover, a larger portion of their existing customer relationships are outside the traditional alternative investment industry. Therefore, they will likely be expanding the market, rather than competing with other alternative managers for assets. Also note, Fidelity and T Rowe Price each have diversified financial services businesses which will give them unique access to detailed proprietary data on a wider range of potential investors. It is exceedingly unlikely these major financial services firms would launch NT BDCs unless they anticipated they could raise funds that were large relative to the existing size of the market.

Many firms with existing alternatives businesses are also launching new NT BDCS. Nuveen and Blackrock are other examples of traditional assets management firm that were earlier to the alternatives market , and they have both launched new non-traded BDCS in 2022. Other firms familiar with anyone who watches the private equity and private credit space, such as Golub Capital, Owl Rock, Ares, Oaktree, and Bain have also launched new funds in 2022.

Recent Non-traded BDC Launches

The following table lists all the non-traded BDCS that have launched

Fund	Offering Type	Term	Launch Date
TCW Star Direct Lending LLC	Private	Finite	9/1/2022
Brightwood Capital Corp	Private	Finite	7/29/2022
Nuveen Churchill Private Capital Income Fund	Public	Perpetual	7/22/2022
PIMCO Capital Solutions BDC Corp	Private	Finite	7/11/2022
Sixth Street Lending Partners	Private	Finite	6/28/2022
Varagon Capital Corp.	Private	Finite	6/2/2022
BlackRock Private Credit Fund	Public	Perpetual	5/31/2022
New Mountain Guardian IV BDC L.L.C.	Private	Finite	5/6/2022
Wellings Real Estate Income Fund	Private	Finite	5/3/2022
AFC BDC Inc.	Private	Finite	4/29/2022
AGTB Private BDC	Private	Finite	4/18/2022
Redwood Enhanced Income Corp.	Private	Finite	4/1/2022
Golub Capital Direct Lending Unlevered Corp	Private	Finite	3/31/2022
Golub Capital BDC 4 Inc.	Private	Finite	3/31/2022
Owl Rock Technology Income Corp.	Public	Perpetual	2/11/2022
Oaktree Strategic Credit Fund	Public	Perpetual	2/3/2022
HPS Corporate Lending Fund	Public	Perpetual	1/27/2022
North Haven Private Income Fund LLC	Private	Perpetual	1/24/2022

Note that all the public NT BDCs launched in 2022 so far are perpetual life vehicles. In contrast, all but one of the private BDCs is a finite life vehicle.

Recent non-traded BDC registrations

Several high-profile firms have funds still pending registration, and they will likely launch within the next few months. The following table shows notable public NT BDCS that are pending registration as of the date of this report.

Fund	Term	Registration Date
Fidelity Private Credit Fund	Perpetual	9/6/2022
T. Rowe Price OHA Private Credit Fund	Perpetual	7/28/2022
Ares Strategic Income Fund	Perpetual	8/8/2022
Bain Capital Private Credit	Perpetual	12/23/2021

Investors seeking private credit exposure can now choose from several non-traded BDCs managed by top brand name asset management firms. Asset managers entering the space will face increased competition, but also benefit from the mainstream acceptance of the fund structure. Successful NT BDC sponsors will find ways to distinguish themselves from the competition through prudent underwriting and skilled deal sourcing.

The NT BDC sector has been here for years. It started as a backwater of the credit markets, but it has grown and transformed into a critical part of the financial system. No asset manager or credit investor can afford to ignore NT BDCs.

Note: This is an excerpt adapted from a Pro Research Report: Don’t Call it a Comeback: The Revival and Transformation of the Non-traded BDC Sector, available to Alternative Investments Pro Members. Click here to sign up and access the full report. Already a member? Click here to login and access the content.

Fidelity Will Open Up New Distribution Channels for Alternative Investments

Fidelity’s registration of a non-traded BDC and an interval fund represents a watershed moment for the alternative investments sector. In a prior article we examined the structural and strategic differences between these two funds. In this article we will discuss the broader meaning for the investment management industry.

First of all, Fidelity is gigantic compared to NT BDC and Interval Fund sector. In order to move the needle at all, Fidelity will need to raise one of the largest BDCs and Interval Funds. According to its website, Fidelity has a total of $3.7 trillion in discretionary assets under management, mostly in mutual funds and ETFs. Compared to these traditional markets, the NT BDC and interval fund sectors are almost comically small.

Total assets in the NT BDC market are ~$124 billion, and the total assets in the interval fund market are $60 billion. If Fidelity were to raise enough capital to double the size of the BDC and interval fund markets, their new funds would still account for less than 5% of their AUM.

Of course BlackRock, which has over $9 trillion in AUM is also active in the retail alts space, with three non-traded BDCs and two interval funds. Yet there is another unique angle to the Fidelity story.

Fidelity is more well known for its equity mutual funds, but its entrance into this niche indicates that they recognize that alternative investment strategies are essential components of a diversified portfolio. Fidelity will be expanding the alternative investments market, rather than just competing with other asset managers.

To learn more about new BDC registrations and launches click here.

To access a list of NT BDCs currently active in the market, click here.

Interested in accessing detailed information on fund fees, asset growth, and performance history? Sign up as an Alternative Investments Pro Member.

Fidelity Launches Non-traded BDC and Interval Fund

Fidelity is entering the alternative investment market with the registration of two new funds: one Non-traded BDC, and one interval fund. Fidelity Private Credit Fund is a non-traded Perpetual Life BDC that has an initial registration statement on September 6, 2022, and an updated draft on October 28, 2022. Fidelity Multi-Strategy Credit Fund is an interval fund that filed a draft registration statement on October 11. Both funds are still pending effectiveness from the SEC.

In this article we take a closer look at Fidelity’s new BDC and Interval Fund, and speculate on some of the broader implications of Fidelity’s entrance into the alternative investments market.

Fidelity BDC Fee Structure

Fidelity Private Credit Fund is targeting a maximum capital raise of $1 billion, and a minimum capital raise of $100 million. It will hold investor’s funds in interest- bearing escrow accounts until they receive purchase orders for at least $100 million in any combination of share classes. Based on expressions of investor interest, they expect to hold a first closing and break escrow in 2023Q1. Fidelity’s new BDC will have a base management fee of 1.25% per year. Additionally, it will charge an incentive fee consisting of two parts. The first part of the incentive fee is based on income- the manager will receive 12.5% of pre incentive fee net investment income over a 5.0% hurdle rate. Additionally, the fund will pay the manager 12.5% of cumulative realized capital gains.

Fidelity Distributors Company , LLC will conduct the non-traded BDC offering, and won’t charge any sales load. Some financial intermediaries may charge sales loads or placement fees for for S,and D shares, although total amount cannot exceed 3.50% for Class S and 1.50% for Class D. Servicing/distribution fee will be 0.85% for Class S shares and 0.25% for Class D shares.

Fidelity Interval Fund Fee Structure

Fidelity Multi-strategy Credit Fund plans to conduct a continuous offering for an unlimited amount of shares. The draft prospectus for Fidelity’s Interval Fund still needs several details to be filled in. In particular, the management fee amount is not yet specified. It will have two share classes: Class A and Class I. Minimum investment will be $1,000,000 for Class I. Minimum investment for Class A is not yet specified. Most likely it will be a retail share clas with a low (ie $2,500 or lower) minimum investment. Fidelity Distributors Company, LLC will also conduct the interval fund offering.

Fidelity BDC and Interval Fund Strategy Comparison

Fidelity’s BDC and interval fund are both credit focused , but there are important differences between their strategies. As a BDC, the Fidelity Private Credit fund will invest at least 70% of assets that meet regulatory requirements of the BDC structure- generally this will mean U.S. firms with market values of less than $250 million. BDC portfolio companies are generally private and sponsor backed, but they might also be small cap public companies. Fidelity Private Credit Fund will primarily focus on directly originated loans to private companies but will also invest in syndicated loans and other liquid credit investments. Fidelity Private Credit Fund has the official objective of: “Generate current income and, to a lesser extent, long term capital appreciation”

Fidelity’s interval fund will invest in a broader range of credit assets as the name “Fidelity Multi-Strategy Credit Fund” implies. According to the registration statement, it will invest opportunistically in various credit instruments. The foundational credit assets will include direct lending, real estate debt, leverage loans,h high yield bonds, collateralized loan obligations. Fidelity’es interval fund will also make opportunistic credit investments in distressed debt, special situations, convertible bonds, preferred stocks, and privately originated dals. The investment objective for Fidelity’s interval fund also reveals a broader mandate: “Provide a high level of current income and capital appreciation through investments across a variety of high-income oriented asset classes including both liquid and illiquid securities.”

To learn more about new BDC registrations and launches click here.

To access a list of NT BDCs currently active in the market, click here.

Interested in accessing detailed information on fund fees, asset growth, and performance history? Sign up as an Alternative Investments Pro Member.

Strategic Realty Trust Tender Offer

Alternative Liquidity Capital has announced an offer to purchase up to 1,050,000 shares of Strategic Realty Trust, Inc.(SGIC) at a price of $0.75 per share. Offer documents are available on the SEC EDGAR database and at Alternative Liquidity’s website. In this article we provide some background information on SGIC, and the offer.

Strategic Realty Trust Background and History

SGIC is a non traded REIT that had the unfortunate timing of launching in early 2009. Consequently, it only raised $100 million, far below what it originally targeted. In 2013 a new external advisor took over management.

Strategic Realty Trust is not currently paying distributions, and there is no assurance that it will pay distributions in the future.

According to the form 10-K for the year ended December 31, 2021:

We are uncertain of our sources for funding our future capital needs and our cash and cash equivalents on hand is limited. If we cannot obtain debt or equity financing on acceptable terms, our ability to acquire real properties or other real estate-related assets, fund or expand our operations and pay distributions to our stockholders will be adversely affected.

On the other hand, SGIC recently sold one of its properties, according to an 8-K filed on October 17, 2022. That may free up some cash to start making distributions soon.

Liquidity Options for Strategic Realty Trust Shareholders

SGIC shareholders have been stuck for a long time with limited liquidity options. The share repurchase program has been suspended for normal circumstances since 2015, and since 2020 it has also been suspended even for cases of death/disability. Secondary trading in the shares has been extremely limited. In September and October 2022, CTT Auctions reported 3 separate auctions for small blocks of shares at prices ranging from $0.76 to $0.78 per share.

SGIC investors seeking liquidity should discuss the tender offer with their financial advisor before making a decision.

About Alternative Liquidity Capital

Alternative Liquidity Capital will also purchase other non-traded alternative investments. If you have questions about the Strategic Realty Trust Offer, or you have other illiquid assets you are looking to sell please contact info@alternativeliquidity.net

StHealth Capital Investment Corp

STHealth Capital Investment Corp has a sordid history. Some investors knew it as Freedom Capital, others knew it as First Capital Investment Corp. Probably all have been stuck in the investment for years. Now at last, there is an opportunity for long suffering investors to get some cash out and exit their investment. But first lets start with the history.

STHealth Capital Investment Corp History

Originally known as Freedom Capital, StHealth Capital Investment Corp launched in 2015, and raised a small amount of capital in the independent broker dealer space. But it didn’t get critical mass, and another sponsor took over the management contract around 2018. Then the SEC sued this sponsor for self dealing and making material misrepresentations among other crimes, and banned its CEO from the securities industry(a couple years later he got arrested for wire fraud for an unrelated business). New management took over, changed the focus to become a healthcare specialist, and renamed it Sthealth Capital Corporation. One of the directors resigned in protest, and wrote a hilarious letter criticizing the management.

As of September 30, 2021, the last date for which it filed a 10-Q, StHealth had $2.6 million in gross assets, and with its only reported debt being accounts payables and accrued expenses, $2.2 million in net assets. That works out to about $0.55 NAV per share. About half its assets are in cash and the other half is in a messy grab bag of securities. The securities are about ⅔ biotech startups, and ⅓ “other trading securities”. The biotech startups are all Level 3 Assets, so we can’t really take their valuations too seriously. The other trading securities are all reportedly valued based on quoted market prices, although the 10-Q provides no specific detail on individual holdings. Moreover, there has been a lot of market volatility since September 30. If we value the securities at zero, then the net cash per share would be $0.21.

In March 2022, their auditor resigned, citing their decision to no longer operate in the BDC space. In May 2022. The CEO/President/CFO resigned, although he is keeping the chief investment officer role. A new person took over in all of those roles. This past week the chief compliance officer and general counsel resigned. They hired a new chief compliance officer from an outsourcing firm. Several Subsequent 8-Ks indicate StHealth has gone through several compliance executives in the past year. Seems no one in the compliance role wants to stay long.

STHealth Capital Investment Corp Tender Offer

Alternative Liquidity Capital has announced an offer to purchase up to 130,000 shares in StHealth Capital Investment Corp at a price of $0.10 per share. Alternative Liquidity Capital is a Delaware Limited Partnership and is not affiliated with STHealth. The Investment Manager for Alternative Liquidity Capital is related by common ownership to Ockham Data Group, the holding company for Alternative.Investments.

The Offer document provides this explanation for the offer price of $0.10:

In determining the Purchase Price, the Purchaser analyzed a number of quantitative and qualitative factors including: (i) the lack of a secondary market for resales of the Shares and the resulting lack of liquidity of an investment in the Company; (ii) the fact that the company is delinquent in its filing obligations with the SEC, and consequently there is considerable uncertainty as to the value of the Company’s assets; (iii) risks in the Company’s investment strategy and the estimated value of the Company’s assets; (iv) the costs to the Purchaser associated with acquiring the Shares; and (v) the Purchaser’s objective to profit from this Offer. Based on this valuation methodology the Purchaser has established a price of $0.10 per Share.

According to the Company’s Form 10-K for the period ended December 31, 2020:

“The Company’s shares are illiquid assets for which there is not a secondary market and it is not expected that any will develop in the foreseeable future. There can be no assurance that the Company will complete a liquidity event. Even if it does complete a liquidity event, Shareholders may not receive a return of all of their invested capital.” .

To the best of the Purchaser’s knowledge, there company does not have a current share repurchase program.

Additionally, to the best of the Purchaser’s knowledge, the company does not have a currently active share repurchase program. The illiquidity of shares means that Shareholders have limited alternatives if they seek to sell their Shares. As a result of such limited alternatives for Shareholders, the Purchaser may not need to offer as high a price for the Shares as it would otherwise. On the other hand, the Purchaser takes a greater risk in Purchasing Share because Purchaser itself will have limited liquidity for the Shares upon consummation of the purchase.

The Purchaser is offering to purchase Shares which are an illiquid investment and is not offering to purchase the Company’s underlying assets. Although there can be no certainty as to the actual present value of the Shares, the Company established an estimated net asset value per Share (the “Estimated Per Share NAV”) of $0.55 on December 13, 2021, representing the Company’s Estimated Per Share NAV as of September 30, 2021, according to its Form 10-Q- filed with the Commission on December 13, 2021.

The majority of the Company’s assets consist primarily of illiquid investments without a readily ascertainable market value. In its 10-Q for the period ended September 30, 2021, the company notes:

“Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.”

Since the Company has not current in its SEC filing obligations, there is additional uncertainty as to the value of the underlying assets.

The Company may publish an update to its Estimated Per Share NAV during the period in which this Offer is open. Shareholders should consult the Company’s public filings pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for any such updates, which are available at www.sec.gov. In the event that a Shareholder wishes to withdraw its tender of Shares as a result of such update, a withdrawal of tender may be effected pursuant to Section 5 – Withdrawal Rights.

As of the most recent available public filings, the Company’s assets consisted primarily of equity investments in private companies in the healthcare industry. The Company is therefore subject to industry specific risks. In purchasing the shares, the Purchaser will be exposed to risks in the healthcare sector . Declines in the healthcare industry and/or in specific investments in the Company’s investment portfolio could impact the Company’s ability to pay cash distributions.

Before deciding whether to sell your shares to Alternative Liquidity Capital, shareholders are urged to obtain relevant valuations for the shares and are urged to consult with their financial advisor.

If you have any questions feel free to contact the purchaser at info@alternativeliquidity.net or (888) 884-8796. Visit Alternative Liquidity’s website to learn about how you can get cash for your illiquid investments.

5 Benefits of Non-Traded BDCs

Non-traded BDCs are an investment structure that allow investors to access investments in small and medium sized businesses. They can be invest in equity or debt, and focus on providing long term capital gains or income. In practice most non-traded BDCs invest in credit and seek to provide consistent income. In recent years, there has been a surge in investor interest in NT BDCs.

Why should anyone invest in a non-traded BDC? Why not just invest in an exchange traded BDC. In this article, we outline five fundamental benefits that are unique to non-traded BDCs.

Access to Institutional Private Credit Strategies

Private credit can play an important role in portfolio construction by providing diversification, reducing volatility, and enhancing long term returns. However, traditionally many of the best private credit funds have only been available to institutions and large family offices. Private credit funds usually have minimums, high investor accreditation requirements, complicated tax forms, and limited liquidity. However a non-traded BDC makes this type of investment available to a wider audience.

Many non-traded BDCs allow investors to start with as little as $2,500. Unlike private placements, NT BDC investors receive simple 1099 tax filings. Furthermore, non-traded BDCs have more consistent liquidity options than private placements.

Capital Raise Across Market Cycles

The benefits of a continuous capital raise area s subtle and rarely discussed, yet we believe they are one of the key advantages of the non-traded BDC structure. The best opportunities to invest occur during moments of market panic. Yet during times of market panic, publicly traded BDCS generally trade at a discount to NAV. BDCs are forbidden from issuing new shares at a discount to NAV, so they will be cut off from raising capital at the exact moment that they have the best opportunities to invest. This phenomenon was readily apparent during the 2009 global financial crisis, and the 2020 Covid mini crash. In contrast, non-traded BDCS that continuously raise capital are able to deploy capital best when times are most favorable.
The unlisted BDC structure offers flexibility that traded BDCs don’t have.

Emotional Management

The average investor return in a mutual fund is far lower than the actual return achieved by a mutual fund. How is that possible? Because retail investors too often react emotionally to market volatility, selling at the bottom, and buying at the top. The non-traded BDC structure puts in a barrier to slow down emotional reactions, potentially preventing their financial consequences.

Although non-traded BDCs offer some liquidity options(typically quarterly), the extra stop gap helps investors better manage emotions. This is also valuable for financial advisers trying to encourage prudent behaviour in their clients. With NT BDCs, investors are more likely to achieve the best possible returns from holding any given fund over a market cycle.

Long Term Emphasis

Managers of listed companies may talk about the long term, but in reality they are typically driven by short term share price pressure. In contrast, the manager of a non-traded BDC can focus on long term opportunities without the short term pressure of the stock price. As a result, an unlisted structure is a better fit for more complex, and potentially lucrative investment strategies.

Transparency

Alternative investments have historically had a reputation for opacity. If you invest in a private equity fund or hedge fund, often you are unable to see specific details on underlying investments. However all NT BDCs are registered under the 1940 act, and consequently must provide regular updates in SEC filings. In fact, NT BDCs file the same quarterly and annual reports as publicly traded companies in the SEC’s EDGAR database

These public filings contain a wealth of information. Alternative.investments is a resource you can use to make the best use of it. Transparency is an important benefit of non-traded BDCs.

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