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Pantheon eyes $500 mln for new retail investor fund

  • Firm: Pantheon
  • Fund: AMG Pantheon Fund LLC
  • Target: Fund registered to sell $500 mln

Pantheon’s new AMG Pantheon Fund marks the manager’s first product built from the ground up for retail investors under the same regulatory regime as publicly traded mutual funds.

“It’s intended to be a long-term vehicle for people to come into and let their investment grow,” said
Kevin Albert, managing director for Pantheon.

With an eye on people saving for retirement or putting their kids through college, AMG Pantheon Fund registered to sell up to $500 million in units, according to an October 27 filing. The vehicle is designed as an evergreen fund that could grow bigger over time, with limited redemption rights.

AMG Pantheon will be offered to accredited investors through registered investment advisor networks and commission-based wire houses.

The new effort comes after Pantheon launched the AMG Pantheon Private Equity Fund under the Investment Company Act of 1940, in 2014. That fund has morphed into the AMG Pantheon Fund. The fund is now registered under the Securities Act of 1933 and the 1940 Act to accredited investors — individuals with a net worth exceeding $1 million excluding primary their residence.

Pantheon, along with Carlyle GroupKohlberg Kravis Roberts & Co and others, have been working separately on opening private equity to defined contribution plans such as 401(k) plans. All three firms have been working on various mutual fund structures.

Meanwhile, traditional pension plans – also known as defined benefit plans – continue to fade in the workplace outside of retirement systems for public employees.

Diversity of investments

David Carlson, senior vice president and head of solutions research at AMG Funds, said the Pantheon fund differs from others in the field, partly because it invests in funds from other managers.

“Pantheon doesn’t have a separate team of people making investments for this fund,” Carlson said. “They have the same investment team making decisions … side by side with their other clients.”

A multimanager vehicle seeking diversification across all key private equity categories, AMG Pantheon Fund provides exposure to various GPs, stages, vintages, industries and geographies. It will invest alongside its institutional LPs in primary fund investments, secondary investments and co-investments.

In terms of asset allocation, between 40 percent and 100 percent of the fund will go to buyouts, up to 20 percent to growth capital and up to 40 percent to special situations/real estate/other private assets.

In terms of geography, 20 percent to 100 percent of fund commitments will go to North America, up to 40 percent to Europe and up to 40 percent to Asia and the rest of the world.

Retail-friendly features

To make the fund more accessible to individuals seeking alpha from private equity exposure, the fund offers access to accredited investors for as little as $25,000, less than the $50,000 threshold of its 40 Act predecessor.

To avoid the challenges of K-1 income statements, the AMG Pantheon Fund issues 1099 income forms to simplify tax reporting. The fund also differs from traditional private equity through its lack of capital calls.

Instead of contacting investors to set up capital calls every time the fund lines up an investment, clients pay their total commitment up front.

“In traditional private equity, you sign a commitment agreement as an LP in a fund and typically have five days to fund capital calls,” Albert said. “That makes people nervous, because the capital calls may come while you’re on vacation or low on your liquid cash. We’ve eliminated that.”

The portion of the portfolio that is not invested in private equity investments is invested in a combination of an S&P 500 ETF and cash equivalents, the firm said.

In another move for individuals, the fund offers limited liquidation rights, although frequent trades in and out of the fund are discouraged by the fee structure. The fund also provides monthly valuations on the fund’s performance to help investors track the net asset value of their holdings.

Pantheon removed the words “private equity” from the name because of rules requiring 80 percent of assets in a fund to be applied within a limited period of time. Since private equity doesn’t typically invest its money within the limited timeframe of getting a commitment, Pantheon decided to simply call the new fund, AMG Pantheon Fund.

Action Item: See the prospectus for AMG Pantheon Fund LLC here: http://1.usa.gov/1NOSL6g