AVON, Conn.--(BUSINESS WIRE)--FlowStone Partners, which provides private equity investment opportunities to qualified High Net Worth investors, announced the launch of the FlowStone Opportunity Fund (the “Fund”), a closed-end, non-exchange-listed investment management company registered under the Investment Company Act of 1940 (the "'40 Act"). The new ’40 Act Fund, which began operations on Aug. 30, offers qualified investors a simplified way to access private equity investments through a broadly diversified, professionally managed portfolio.
The Fund launches with a completed transaction and has several other opportunities in process which may close prior to the end of 2019.
The FlowStone Opportunity Fund will invest in a mix of secondaries, primary investments, and co-investments and will be diversified across several important metrics, including underlying manager/investment strategy, vintage year, sector and geography. The Fund's strategy seeks exposure to the attractive risk-adjusted returns of the private equity asset class through a vehicle designed to meet the needs of the High Net Worth investor. Secondary acquisitions—expected to make up between 50 and 100 percent of the portfolio—pursue mature, return-generating assets at a discount to their intrinsic value and may mitigate the J-Curve common in private equity.
“Historically, it has been challenging for qualified individual investors to access private equity and alternative investment strategies,” said Scott P. Conners, FlowStone’s President and Managing Director. “High quality companies are staying private longer, and exposure to these investments is becoming increasingly important to a well-diversified portfolio. We believe the FlowStone Opportunity Fund—which combines the benefits of private equity secondary and primary investments, as well as co-investments—offers an excellent approach, especially for investors who may be new to private equity and are seeking to build a core, diversified position in the asset class via a single investment. In addition, the FlowStone fund is intended to provide investors much greater investment flexibility than what is offered by traditional, institutionally-oriented private equity investment vehicles.”
As a ’40 Act fund, FlowStone Opportunity Fund offers investors a familiar structure. It provides simplified access to a diversified portfolio of underlying private equity investments, with Fund shares purchased and redeemed through the Fund itself. The minimum initial investment for the Fund is $100,000, and follow-on investments can be made starting at $10,000. The Fund's redemption feature allows for liquidity on a quarterly basis, subject to some limitations. The Fund also features Form 1099 tax reporting, simplifying the tax return process.
The FlowStone Opportunity Fund management team is highly experienced, with over 80 years of combined experience in private equity investing at leading institutional investment firms. The group has completed over 100 transactions and is led by Scott P. Conners, CFA, Managing Director of FlowStone Partners. Conners has over two decades of experience, having served as a Partner at Landmark Partners prior to joining FlowStone. Working with Conners are Michael A. Carrano, Managing Director (formerly of Landmark Partners); Andreas Muenderlein, Managing Director (formerly of Partners Group); Jason A. Neal, Managing Director, Business Development (formerly of Landmark Partners); William S. Bertha, Senior Associate (formerly of Adams Street Partners), and Charlie Finnegan, Associate (formerly of Aberdeen Standard).
FlowStone Partners provides High Net Worth and Family Office investors with institutional-quality, highly diversified exposure to the private equity asset class through secondary, primary, and co-investment strategies. As opposed to institutionally oriented fund-of-funds investment managers, our investment strategies are executed through investment vehicles that strive to meet the unique requirements of High Net Worth investors and their advisors. For more information, please visit www.flowstonepartners.com.
Co-Investments — Co-investments generally involve taking an interest in securities issued by an operating company, whether equity or debt, in parallel with a sponsoring fund manager acting as the lead investor. Direct equity investments generally involve new owners taking a material stake in the target company and may involve exercising influence on the growth and development of the company through work with the company’s management and board of directors. Direct debt investments typically represent financing for buyout or growth investments and may have various features and covenants designed to protect the lender’s interests.
J-Curve — The value development pattern in which the net asset value of a private equity fund typically declines moderately during the early years of the private equity fund’s life as investment-related fees and expenses are incurred before investment gains have been realized. As the fund matures and portfolio companies are sold, the pattern typically reverses with increasing net asset value and distributions.
Primary Investments — Primary investments (primaries) are interests or investments in newly established private equity funds. Primary investors subscribe for interests during an initial fundraising period, and their capital commitments are then used to fund investments in several individual operating companies (typically ten to thirty) during a defined investment period. The investments of the fund are usually unknown at the time of commitment, and investors typically have little or no ability to influence the investments that are made during the fund’s life.
Secondary Investments — Secondary investments are interests in existing private equity funds that are acquired in privately negotiated transactions, typically after the end of the private equity fund’s fundraising period. The investments of the acquired fund are usually known at the time of acquisition, and the majority of the fund’s capital is typically drawn down and invested by the time of the fund’s acquisition.
Vintage Year – The year in which a new fund has completed its fundraising and is closed to new investors.
BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER INFORMATION IS IN THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED FROM JASON NEAL AT FLOWSTONE PARTNERS AT 617-750-9041. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
The Shares are speculative and illiquid securities involving substantial risk of loss. An investment in the Fund is appropriate only for those investors who do not require a liquid investment, for whom an investment in the Fund does not constitute a complete investment program, and who fully understand and can assume the risks of an investment in the Fund.
Investors should carefully review and consider potential risks of the Fund before investing. These risks include but are not limited to: Loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative practices; Lack of liquidity in that there may be no secondary market for a fund; Volatility of returns; Restrictions on transferring interests in a fund; Potential lack of diversification and resulting higher risk due to concentration of allocation authority when a single adviser is utilized; Absence of information regarding valuations and pricing; Complex tax structures and delays in tax reporting; Less regulation and higher fees than mutual funds; Risks associated with the operations, personnel and processes of the manager; and Risks associated with cybersecurity.
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