Fund of Funds FAQs
1. What is Fund of Funds?
A Fund of Funds is a vehicle used to allow investors to participate in a more broadly diversified pool of investments. Camden Private Capital was formed to sponsor a private equity fund of funds comprised of individual investment partnerships managed by third party management teams.
2. Why invest in private equity?
Private equity as an asset class has the potential to provide long term returns superior to those of the public equity markets.
3. What is Camden’s approach?
Our approach is to offer a diversified fund of funds with allocations to venture capital, growth equity, buyouts and special situations. Our portfolio of funds consists of balance of established, franchise funds and emerging managers who though experience may be fielding their first or second fund under a new banner. We also create diversification by making sure that each of our funds spans several vintage years,includes 10-15 distinct manager groups, investing at several stages of investment and in a variety of industries. Our funds may have 200 or more portfolio companies adding a further dimension to our diversification approach. Our funds of funds includes several vintage years, 10-15 distinct manager groups, representative stages of investment and a variety of industries. Each Fund of Funds may have 200 or more portfolio companies adding breadth to our diversification approach.
4. What is Venture Capital?
Venture Capital generally refers to start up capital or capital used to develop a new business opportunity. It is characterized by the opportunity for high growth and correspondingly has a higher degree of risk than capital raised for established businesses. Venture capital may be deployed at various stages – seed, early and late – with varying degrees of associated risk.
5. What is growth equity?
Growth equity is capital raised to support the growth of a business that has already established some level of profitability.
6. What is a buyout fund?
A buyout fund is a corporate finance-type investment that involves the purchase of a majority interest in an established company on a leveraged basis. LBOs help management teams finance the purchase of established and often profitable companies. This typically is done by providing equity to make a down payment on the purchase of a business and financing the remaining portion of the purchase price with debt. The assets of the company are used as collateral for the loans, and the future cash flow of the company is used to pay off the debt. The transaction is often structured to allow existing management to operate the business while holding a substantial equity stake.
7. What are special situations?
We define special situations as subordinated or other types of structured debt funds, royalty funds, infrastructure funds, distressed funds and co-investment opportunities.
8. How is an investment in private equity funded?
An investor makes a commitment by signing a subscription document agreeing to invest a certain amount. The money is then called as needed to fund investments that the underlying funds are making. The commitment is not funded all at once but over time with the majority being called during the investment period which is 5-6 years.
9. How do you keep investors updated on their investment?
Camden Private Capital is committed to a frequent and interactive dialogue with investors. Our regular communications include capital calls and distributions, portfolio update letters, semi-annual unaudited financial statements and capital account statements, annual audited financial statements and account statements, Forms K-1 and an Annual Meeting. We also provide customized updates and reviews in person.
10. How should I approach an investment in private equity?
We recommend a mulit-year investment commitment to private equity. An allocation to private equity cannot be responsibly achieved all at once. Camden’s mulit-year program allows the allocation to be taken down across varied market cycles and available opportunities. This allows for broader diversification across time horizons, manager availability, industry sectors, geography and the various strategies and stages of investments.
For more information about Camden Private Capital, click here.
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