Who We Serve / General Partners – Primary Commitment Program
Primary Commitment Program
Provides an anchor capital commitment and optional participation in our Preferred Liquidity Provider Program for your Fund at no cost to you or your limited partners.
Beneficient is ready to commit significant funds to select General Partners (GPs) and is uniquely positioned to address two of the major concerns currently facing GPs and their investors: fundraising and accessing liquidity.
Your Primary Capital Source
- Primary Subscription Commitments will be made into a Fund from a Kansas Economic Growth Trust (“KEGT”) in an amount up to 17.5% of a participating GP’s Fund’s targeted raise.
- Funded in full within 3 business days at each closing through the issuance of convertible preferred stock, which is convertible into the shares of our parent company’s Nasdaq-listed common stock.
Value-Add Fund Services
- AltAccess makes Fund Services available that are designed to deliver a suite of services to your Fund at no cost, representing a potentially significant savings to Fund Limited Partners (LPs) over the life of the fund.
- Fund Services include participation in our Preferred Liquidity Provider Program with many advantages, including: convenient and cost-effective rapid exits for Fund LPs and possible earlier monetization of Fund investments.
- Our additional, no-cost Fund Services include custody of non-cash assets, cutting edge investment analytics and data with online reporting available for GPs and LPs, and an array of full-service fund administration and recordkeeping services expected to be available in 2024.
- Controlled by a Nasdaq-listed parent company and operating through a regulated and chartered fiduciary financial institution and trust company (“Fid Fin Trust Company”) authorized to implement the Primary Subscription Commitment Program.
- Our Fid Fin Trust Company operates under the supervision of its state banking regulator, serving as regulated trustee, custodian and liquidity provider to GPs and LPs.
- SOC 2® , Type 1 and Type 2 and SOC 3® certifications and AT&T NetBond® rating for the AltAccess platform was developed to deliver our Fund Services online in a more secure and regulated environment. The AltAccess platform is subject to examination and supervision by a state banking regulator.
Preferred Liquidity Program
Solutions for General Partners and Wealth advisors facing challenges in launching new funds, raising capital, or answering liquidity demands from their Limited Partners, advisors and clients. Review the program here.
Here is How the Program Works
Step 1: Ben makes a primary commitment into GPs fund via a Kansas TEFFI Economic Growth Trust (KEGT) in an amount up to 17.5% of the Fund’s targeted raise
Step 2: Optional fund services, including our Preferred Liquidity Program, are made available to a participating GP’s Fund at no cost
Step 3: On or before the final closing of the Fund subscriptions, the Fund will redeem in cash a portion of the KEGT’s capital account in an amount necessary to reduce the KEGT’s ownership percentage to 14%.
Frequently Asked Questions
Why is the primary commitment fully funded within three (3) business days of each closing?
Does the primary commitment require any manager ownership or fee reductions?
What additional benefits does the Preferred Liquidity Provider Program offer?
Why not make primary commitments in cash instead of equity?
Is the Preferred Stock contributed to the commitment convertible into publicly registered securities?
The Fund can convert the Preferred Stock in whole or in part at any time and seek to liquidate the common stock through market sales once freely tradeable. The Preferred Stock will be issued, and our commitment will be funded, within three (3) business days of each Fund closing. The Fund will have complete discretion over the timing and manner of the conversions of the Preferred Stock and subsequent sales of the underlying common stock. The Fund could choose to convert and sell the shares in the same proportion and in advance of each capital call made by the Fund. For example, in advance of a Fund capital call of 5% of total Fund subscriptions, the Fund could convert 5% of its Preferred Stock and sell the common stock issued in connection therewith.
Who bears the risk of realizing value from sales of the common stock following conversion of the Preferred Stock?
Are there any mitigants for the downward performance of the common stock?
Will the Fund be able to convert the Preferred Stock and sell the common stock immediately at closing?
How would the upfront equity commitment be classified for preferred return calculations, GP carried interest allocations and Fund reporting purposes?
What is the reason for the Pro Rata Redemption Requirement and why would the Fund be required to make the Pro Rata Redemption Requirement with cash?
The Pro Rata Redemption Requirement cannot be met with a distribution of the Preferred Stock KEGT contributed in connection with making the Primary Subscription Commitment because the KEGT and our Fid Fin Trust Company are not able to satisfy its fee and expense obligations with non-cash assets among other securities law limitations.
Is the Redemption Requirement considered a return of capital that adversely impacts other LPs?
If the fund’s distributions of cash are generally allocated pro-rata across LPs does the Redemption Requirement need to be communicated and approved by all LPs?
How does a GP qualify for the Primary Subscription Commitment investment?
- Funds with $100 million or greater targeted total subscriptions
- Alternative asset classes including private equity, private credit, real assets, and others
- Fund types including direct, secondary, feeder funds, fund-of-funds, co-investments, and others
- Investment strategy and team subject to underwriting review
- Exceptions will be considered by our Credit Management Committee
- GPs willing to accept future co-investment capital (from which the GP would also earn a carried interest participation) from the KEGT will receive preference.
What is the KEGT?
What is the primary source of capital for the Kansas Economic Growth Trust?
How is the Kansas Economic Growth Trust regulated? Are there any restrictions preventing Beneficient from investing in funds that are not registered?
Does the Primary Subscription Commitment Program have an ESG component?
- Childcare and senior programming – projects that support or enhance these services, such as building improvements, educational materials, supplies and equipment.
- Community vibrancy – projects that refresh, re-energize and unlock the attractiveness of rural communities, such as art installations, murals and signage.
- Food retail – projects that support access to food retail establishments, including development, renovation and/or expansion.
- Libraries – projects that support providing free and open access to a broad range of materials and services, including reading material, technology, furniture and building improvements.
Any distributions made in connection with our investment in the Fund and the amount received from the Required Redemption help fund this unique ESG initiative. The Fund and LPs benefit from the real value and differentiation that this ESG initiative delivers across hundreds of rural communities.
What documents are needed to facilitate this transaction?
- Fund’s subscription agreement – to be completed by KEGT, evidencing KEGT’s commitment to the Fund.
- BENF’s subscription agreement– to be completed by the Fund, whereby the Fund is subscribing to receive the Preferred Stock for the purpose of funding the KEGT’s commitment.
- Side Letter – to be negotiated between the Fund, KEGT and BENF, dictating the more specific terms of the transaction and investment structure.
At the initial closing of the Fund, as discussed above, the KEGT’s commitment would be limited to, generally, 17.5% of the total subscriptions of the Fund as of the date of such closing and funded in the manner set forth above. The KEGT’s commitment would increase (i.e., continuing to be based on the percentage of total subscriptions) at each subsequent closing of the fund and such increased commitment amount would be funded in the same manner as set forth above; provided that such amount will be funded pursuant to the issuance of a new subseries of the same Preferred Stock, with the only difference in the terms being the initial conversion price. The initial conversion price for the new subseries of Preferred Stock would be set as of the closing date on each subsequent closing. To facilitate the issuance of the new subseries upon each subsequent close, BENF and the Fund will need to amend or enter into a new BENF subscription agreement (on substantially the same terms) for the purpose of having the Fund subscribe for the new subseries of Preferred Stock.
Touting our membership in Ben’s Preferred Liquidity Provider Program in LP meetings has been transformative for our business. These smaller LP contributors need liquidity optionality, and Ben’s solution is the ace up our sleeve for addressing the concern. −Oklahoma-based early-stage VC firm