(Bloomberg) — Sagard Holdings Inc . of Canada is launching a private equity fund for retail investors, the latest example of an alternative asset manager expanding its reach beyond institutional investors and ultra-high-net-worth individuals.
Sagard, a unit of Power Corp. of Canada, will target accredited Canadian investors with at least C$1 million ($695,000) in financial assets or more than $200,000 in annual income for the new product, called Sagard Private Equity Strategies LP.
Sagard launched a private credit fund for this investor segment last year; it had more than C$90 million under management as of November. The firm also manages a more than $430 million loan fund for online investment service Wealthsimple Financial, which is also controlled by Power.
Sagard Chief Executive Paul Desmarais III said the firm's private equity funds are typically raised with a minimum investment of $10 million. For this retail fund, it will be 25,000 Canadian dollars.
“We're looking to democratize access to what we think is the most important part of the investment industry for the next decade,” Desmarais said in an interview.
While retail investors owned more than 50% of global wealth in 2023, they represented about 16% of alternative assets under management, or roughly $4 trillion, according to consulting firm Bain & Co. as they struggled to raise fresh capital from institutions.
BlackRock Inc. and Partners Group Holding AG merged last year to create a “one-stop portfolio” that gives retail investors access to a range of private assets. Brookfield Asset Management said in September that it plans to to start a private equity product for wealthy individuals.
“Building the product for the wealth channel is different,” Desmarais said. “We were thoughtful in how we built it, because you need diversification and you need liquidity.”
Sagard and several clients will deploy the new fund with $50 million in seed capital, primarily to acquire interests in private middle-market companies. The goal is to produce long-term annual net returns of 14% to 18%.
Management fees are set at 1.5%, and performance fees at 12.5% above a threshold of 8%.
“We've really spent a lot of time building this especially with investor liquidity in mind,” he said. “But financial advisors will typically only recommend these funds to investors who don't need their money short-term, because the truth is that the underlying assets are still illiquid. This is something that investors considering investing in private equity should keep in mind.”
Sagard's assets under management jumped to more than $27 billion last year, thanks to a combination of organic growth and the acquisition of Performance Equity Management.
Read more:
BlackRock Partners to Offer Retail Investors 'One-Stop' Access
Brookfield will offer private equity product to retail investors
Private equity finds another way to keep the money coming in
The Desmarais Family's Sagard seeks growth with private retail funds