The Carlyle Group, in tandem with independent advisory firm Central Park Advisers, has set up a vehicle that will allow investors to commit a minimum of $50,000 to its buyout funds, according to a Form N-2 filing with the Securities and Exchange Commission (SEC). Carlyle declined to comment.
A market source familiar with Carlyle's fundraising efforts said the firm wanted “a democratization of access” to its funds.
The vehicle, CPG Carlyle Private Equity Fund, will act as a feeder fund to Carlyle's institutional buyout funds that usually have a minimum investment requirement of between $5 million and $20 million.
Despite the lower threshold, Central Park Group will be required to certify that commitments to the fund are being made directly or indirectly by “accredited investors” as required under Regulation D of the Investment Advisers Act – meaning Carlyle will not be dealing directly with its smaller investors.
Accredited investors are defined as someone who is worth $1 million (not including their house), who earns $200,000 a year, or has a household income of $300,000.
The source said certifying accreditation was not expected to be difficult for Central Park as “a lot of these [investors] will come through your traditional brokerage firms that obviously have 'know your customer' obligations”.
However, in order to meet this requirement each prospective investor must submit to Central Park a completed “investor application” for compliance purposes.
Carlyle will maintain its 1.5 percent management fee and 20 percent carried interest rate for its funds but investors in CPG Carlyle Private Equity Fund will pay Central Park Group an additional fee of 1.8 percent (or $900 per $50,000 committed).