FlowStone Partners, which provides private equity investment opportunities to qualified high-net-worth investors, has announced the launch of the FlowStone Opportunity Fund.
The new Investment Company Act of 1940 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 that 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 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.
