For decades following the Crash of ’29 and the subsequent New Deal, private investment funds remained the exclusive domain of large, sophisticated investors and the super-rich. Now, with changes in the regulatory environment through the JOBS Act, and the emergence of liquid alternatives, all of that is changing. Even less liquid alternative strategies, such as private equity and venture capital, are becoming more available to the mass affluent.
Enter Pomona Capital
Pomona Capital, a global private equity firm with more than $8 billion in assets under management, recently launched a private equity fund that’s only available to accredited investors, but has a much lower minimum investment, at $25,000, than most private equity funds. The fund, known simply as the Pomona Investment Fund, went live on May 7.
“To date, liquidity and other structural and regulatory challenges have made it more difficult for individuals to gain exposure to alternative assets,” said Pomona Capital CEO Michael Granoff, in a recent statement. “The private equity industry in general is now evolving as we shift from a ‘defined benefit’ retirement universe to a ‘defined contribution’ construct and we think this fund and strategy provides an approach that may be appropriate for many investors.”
Interestingly, the fund does not focus on investing in new private equity funds. Instead, at least 50% of the investments will be made by purchasing interests in private equity funds that launched several years ago, known as “secondary” investments. These funds have already gone through what is known as the J-curve, which is the period of time between making a commitment to invest in a fund and the fund actually investing in companies. That’s when the returns of primary investments in private equity lag because most of the fund’s assets are effectively sitting in cash waiting to be deployed.
The fund’s longer-term, targeted asset allocation is outlined below (see the fund’s prospectus for further information and disclosures):
Low Minimum Investment
Although the $25,000 minimum investment puts the Pomona Investment Fund within the reach of many non-accredited investors, it remains open to accredited investors only. As of 2015, accredited investors include any individuals with at least $200,000 in annual income or $1 million in net assets, excluding the value of one’s primary residence.
The Pomona Investment Fund is considered a “non-diversified,” closed-end management company, under the Securities Act of 1933 and the Investment Company Act of 1940.
Pomona Capital has more than 20 years of experience managing private equity investments, and providing liquidity solutions to private equity investors looking to sell, reduce, or redeploy private equity assets. The Pomona Investment Fund focuses on the secondary market, and thereby avoids many of the risks associated with “blind pools” in the primary market.
Partnership with Voya
While Pomona is the advisor the the new fund and clearly understands the investment side of the equation, they have partnered with Voya for distribution. Jeff Becker, CEO of Voya Investment Management, said his firm is “excited” to begin offering the Pomona Investment Fund to clients. Voya is the distributor of the fund, and Pomona Capital serves as Voya’s private equity platform. “By providing access to private equity, primarily through secondary investments, Pomona Investment Fund offers clients investment opportunities not generally available through traditional asset classes,” he said.
For more information, visit the fund’s website.