An investment in shares of beneficial interest of the Fund (“Shares”) is speculative with a substantial risk of loss. The Fund and the Adviser do not guarantee any level of return or risk on investments by the Fund. There is no assurance that the investments held by the Fund will be profitable, that there will be proceeds from such investments available for distribution to investors, or that the Fund will achieve its investment objective.
Below is a summary of some of the principal risks of investing in the Fund. For a more complete discussion of the risks of investing in the Fund, see ”Risks” in the Fund’s Prospectus. You should carefully consider these risks, together with all of the other information contained in the Prospectus, before making a decision to invest in the Fund:
- The Fund is a recently-organized, non-diversified, closed-end management investment company with no operating history.
- An investment in the Fund, unlike an investment in a traditional listed closed-end fund, should be considered illiquid. Shares are not listed on any securities exchange, and it is not anticipated that a secondary market for Shares will develop. Shares are appropriate only for investors who are comfortable with investment in less liquid or illiquid portfolio investments within an illiquid fund.
- Although the Fund may offer to repurchase Shares from time to time, Shares will not be redeemable or exchangeable at an investor’s option. As a result, an investor may not be able to sell or otherwise liquidate its Shares. The Adviser intends to recommend that, in normal market circumstances, the Fund’s board of trustees (the “Board”) conduct quarterly tender offers of no more than 5% of its net assets. There can be no assurance that the Fund will conduct repurchase offers in any particular period, and investors may be unable to tender Shares for repurchase for an indefinite period of time.
- Shares are subject to substantial restrictions on transferability and resale and may not be transferred or resold except as summarized in the Prospectus and permitted under the Fund’s agreement and declaration of
- A substantial portion of the Fund’s assets are expected to consist of investments for which there are no readily available market quotations. Such securities are valued by the Fund at fair value as determined pursuant to policies and procedures approved by the Board. The value at which the Fund’s investments can be liquidated may differ, sometimes significantly, from the valuations assigned by the Fund. There can be no guarantee that the Fund’s investments could ultimately be realized at the Fund’s valuation of such investments.
- The Fund’s portfolio will include direct and indirect investments in private companies. Private companies are generally not subject to SEC reporting requirements, are not required to maintain their accounting records in accordance with generally accepted accounting principles, and are not required to maintain effective internal controls over financial reporting. Private companies in which the Fund may invest also may have limited financial resources, shorter operating histories, more asset concentration risk, narrower product lines and smaller market shares than larger businesses, which tend to render such private companies more vulnerable to competitors’ actions and market conditions, as well as general economic downturns.
- The Fund intends to invest principally in secondary transactions in private equity and other private asset funds managed by unaffiliated asset managers (“Portfolio Funds”) by acquiring the interests in the Portfolio Funds from existing investors in such Portfolio Funds. In such instances, it is generally not expected that the Fund will have the opportunity to negotiate the terms of the interests being acquired, other than the purchase price, or other special rights or privileges. Moreover, there is no assurance that the Fund will be able to purchase interests at attractive discounts to net asset value, or at all. The overall performance of the Fund will depend in large part on the acquisition price paid by the Fund for its secondary investments, the structure of such acquisitions and the overall success of the Portfolio Fund.
- There is significant competition for secondary investments. No assurance can be given that the Fund will be able to identify secondary investments that satisfy the Fund’s investment objective or, if the Fund is successful in identifying such secondary investments, that the Fund will be permitted to invest, or invest in the amounts desired, in such secondary investments.
- The Fund will pay asset-based fees, and, in most cases, will be subject to performance-based fees in respect of its interests in Portfolio Funds. As a result, investors will be an indirect portion of those fees in addition to the Fund’s direct fees and expenses. In addition, performance-based fees charged by Portfolio Funds may create incentives for the managers of those Portfolio Funds to make risky investments, and may be payable by the Fund to a Portfolio Fund’s manager based on a Portfolio Fund’s positive returns even if the Fund’s overall returns are negative.
- The Fund’s investments in Portfolio Funds are subject to a number of risks. Portfolio Fund interests are expected to be illiquid, their marketability may be restricted and the realization of investments from them may take considerable time and/or be costly. Although the Adviser will seek to receive detailed information from each Portfolio Fund regarding its business strategy and any performance history, in most cases the Adviser will have little or no means of independently verifying this information. In addition, Portfolio Funds may have little or no near-term cash flow available to distribute to investors, including the Fund. Portfolio Fund interests are ordinarily valued based upon valuations provided by the Portfolio Funds’ managers, which may be received on a delayed basis. Neither the Adviser nor the Board is able to confirm the accuracy of valuations provided by Portfolio Fund managers.
- The Fund’s investment portfolio will include investments in the equity and/or debt securities of private companies, including alongside private equity funds and other private equity firms. (“Direct Investments”). There can be no assurance that the Fund will be given Direct Investment opportunities, or that any specific Direct Investment offered to the Fund would be appropriate or attractive to the Fund in the Adviser’s judgment.
- The Fund intends to qualify and elect to be treated as a “regulated investment company” or a “RIC” under the Internal Revenue Code. The Fund must satisfy, among other requirements, certain ongoing asset diversification, source-of-income and annual distribution requirements. If the Fund fails to qualify as a RIC it will become subject to corporate-level income tax, and the resulting corporate taxes could substantially reduce the Fund’s net assets, the amount of income available for distributions to Shareholders, the amount of distributions and the amount of funds available for new investments.
You should rely only on the information contained in the Prospectus. The Fund has not authorized anyone to provide you with different information. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.