Affiliated Managers Group’s AMG Funds and Pantheon have launched the AMG Pantheon Fund that allows accredited retail investors to make a single, minimum $25,000 investment to the multi-manager vehicle.
“It’s designed to be a one-stop shopping experience for the individual investor who can put up as little as $25,000,” Pantheon managing director Kevin Albert said.
“The way it operates is that the same investment team of 70 people in six offices around the world will continue to make investments in primaries, secondaries and co-investments for existing clients, as well as for this fund as a new client in the allocation process.”
The fund provides access to diversified exposure across manager, stage, vintage, industry and geography and fund subscriptions are monthly, according to Albert.
“It’s important to stress that investors in the fund are getting access to the same exact deals as other institutional clients,” David Carlson, AMG Funds senior vice-president and head of investment solutions research, told Secondaries Investor‘s sister publication Private Equity International. “Pantheon is not making separate investments for this fund, just allocating deals already done, to make this fund a single point of PE access for accredited investors.”
For example, Pantheon Global Secondary Fund V, which has held a first close and targets $2.5 billion, is currently investing in the market, according to PEI’s Research & Analytics division. Some of its investments could be allocated pro rata to this retail investor fund.
The fund has a management fee of 70 basis points and provides 1099 tax reporting.
Albert said that unlike a traditional private equity fund with a set target and time frame, this is an evergreen fund that “can grow as big as it can”.
A source close to the matter said the fund target is $500 million, but as an evergreen fund, it could grow bigger over time with limited redemption rights.
Albert noted that, whereas institutional investors hover around 10 percent for PE allocation, individual investors are below 2 percent, with most of them at zero.
“There’s a lot of wood to chop in the individual market because PE has been difficult for individual investors to access,” Albert said.
In creating this fund, Pantheon looked at what people did not like about investing in private equity, such as the high minimums – typically at $250,000 for feeder funds – that expose the investor to one manager, Albert said.
Investors who do make private equity investments in such products have little information about the performance until the realisations and cash distributions come in. To address this, he said the AMG Pantheon Fund will perform monthly calculations on net asset value and publish the results so investors are updated on an interim basis.
Another trait of the fund is that investors will not get capital calls, so they can make follow-on investments a year, or many years after the initial investment, Albert said.
When the fund initially launched in October 2014, it was registered under the Investment Company Act of 1940, which defines and categorises investment companies, and was sold as private placement. Since its registration last week under the Securities Act of 1933, which calls for better disclosure in terms of selling securities, the fund may now be marketed and advertised, Carlson said.
Pantheon manages over $30 billion in assets as of 31 March.
This article first appeared in Private Equity International.
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