486BPOS: Private Shares Fund Files for Continuous Offering of Class A, L, and I Shares

The Private Shares Fund has filed a registration statement for the continuous offering of its Class A, Class L, and Class I shares, aiming for capital appreciation through investments in private operating growth companies.

Summary

• The Private Shares Fund, a Delaware statutory trust, has filed a registration statement for a continuous offering of its Class A, Class L, and Class I shares.
• The fund is registered under the Investment Company Act of 1940 as a diversified, closed-end management investment company operating as an interval fund.
• The fund's investment objective is capital appreciation, primarily achieved by investing at least 80% of its net assets in equity securities of private operating growth companies.
• The fund may also invest in special purpose vehicles (SPVs), venture capital funds (Private Funds), and private investment in public equity (PIPE) transactions.
• Liberty Street Advisors, Inc. serves as the investment adviser, responsible for developing and supervising the fund's investment program.
• The fund offers quarterly repurchase offers for 5% of its outstanding shares at NAV, but investors should consider the shares illiquid.
• The fund's shares are not listed on any securities exchange, and a secondary market is not expected to develop.
• The minimum initial investment is $2,500 for Class A and Class L shares and $1,000,000 for Class I shares, though these minimums may be reduced or waived for certain investors.
• Class A shares have a sales load ranging from 0.00% to 5.75%, while Class L shares have a sales load ranging from 1.25% to 4.25%, depending on the investment amount.
• Class I shares do not have a sales load.
• The advisory fee is 1.90% of the average daily net assets of the fund, paid monthly in arrears.
• The Investment Adviser has agreed to waive management fees and/or reimburse the Fund for expenses to maintain total annual operating expenses at or below 2.65% for Class A, 2.90% for Class L, and 2.40% for Class I shares until May 2, 2026.
• The fund may borrow up to 33 1/3% of its total asset value for temporary liquidity, including share repurchases and investment opportunities.
• UMB Fund Services, Inc. serves as the administrator and transfer agent, while UMB Bank National Association serves as the custodian.
• Foreside Fund Services, LLC acts as the distributor for the sale of shares.
• The fund may enter into Profit-Sharing Agreements with sellers of Portfolio Company or potential Portfolio Company shares.
• The fund has a Fundamental Concentration Policy that it will not make an investment if such investment would result in 25% or more of the Funds total assets being invested in companies in any one particular industry or group of industries.

Sentiment

Score: 6

Explanation: The document is primarily factual and descriptive, outlining the fund's structure, fees, and investment strategies. While it highlights potential risks, it also emphasizes the fund's commitment to capital appreciation and expense management. The sentiment is neutral to slightly positive.

Positives

• The fund's investment objective is capital appreciation, which is a fundamental policy of the Fund.
• The Investment Adviser has entered into a written Expense Limitation Agreement under which it has agreed to waive management fees and/or reimburse the Fund for expenses the Fund incurs, but only to the extent necessary to maintain the Funds total annual operating expenses after fee waivers and/or reimbursement to an annual rate of 2.65%, 2.90% and 2.40% of the average daily net assets of the Fund attributable to Class A, Class L and Class I Shares, respectively, until May 2, 2026.
• The fund may borrow up to 33 1/3% of its total asset value for temporary liquidity, including share repurchases and investment opportunities.

Negatives

• The fund's shares are considered illiquid, with only quarterly repurchase offers available.
• The fund invests primarily in private company securities, which are thinly traded and less liquid.
• Valuation of the fund's NAV relies heavily on the judgment of the Investment Adviser, especially for private company securities.
• The fund may enter into Profit-Sharing Agreements with sellers of Portfolio Company or potential Portfolio Company shares, which could reduce the gain the Fund otherwise would have achieved on its investment, may be difficult to value and may result in contractual disputes.

Risks

• Investments in Portfolio Companies may be extremely risky and the fund could lose all or part of its investments.
• The fund's shares are illiquid and can only be sold in quarterly repurchase programs.
• The fund's investments are primarily in private company securities that are thinly traded and less liquid.
• The fund's NAV is based on the value of its securities, which may be unreliable.
• The fund may not realize gains from its investments.
• The fund may be compelled to liquidate its investments at a loss as a result of actions of majority shareholders.
• The fund may experience a complete loss on its investment in the event of a bankruptcy or liquidation of any of its Portfolio Companies.
• The fund may be subject to lock-up provisions or agreements that could prohibit it from selling its investments for a specified period of time.
• The fund may be subject to corporate-level income tax if it is unable to qualify as a RIC.
• The fund may not receive distributions or that its distributions may not grow over time, particularly since it invests primarily in securities that do not produce current income.
• The fund has broad discretion over the use of proceeds from this continuous offering and will use proceeds in part to satisfy operating expenses.

Future Outlook

The Fund intends to continue operating as a diversified, closed-end management investment company and to qualify as a regulated investment company (RIC) under Subchapter M of the Code.

Industry Context

The announcement reflects a trend among investment funds to offer diverse share classes to cater to different investor needs and preferences, particularly in terms of fees and minimum investment amounts. The fund's focus on private operating growth companies aligns with the increasing investor interest in accessing private markets for potentially higher returns.

Comparison to Industry Standards

• The fund's expense ratios and fee structure are comparable to other closed-end funds investing in private equity.
• Comparable companies include BlackRock Innovation and Growth Trust (BIGZ) and Neuberger Berman Next Generation Connectivity Fund Inc. (NBXG).
• The fund's investment strategy of investing in private operating growth companies is similar to that of venture capital funds and private equity funds.
• The fund's quarterly repurchase offers are a common feature of interval funds, providing limited liquidity to investors.

Stakeholder Impact

• Shareholders will have the opportunity to invest in private operating growth companies.
• Shareholders will be subject to the risks associated with illiquid securities and private company investments.
• Financial intermediaries may receive compensation for selling shares.
• The Investment Adviser will be responsible for managing the fund's investments and operations.

Next Steps

• The fund will continue to offer shares on a continuous basis.
• The fund will invest the net proceeds in accordance with its investment objective and principal strategies.
• The fund will monitor its portfolio to ensure compliance with the 80% Policy.
• The fund will make quarterly repurchase offers for 5% of its outstanding shares.

Key Dates

Keywords

Private Shares Fund, continuous offering, Class A Shares, Class L Shares, Class I Shares, capital appreciation, private operating growth companies, Liberty Street Advisors, interval fund, illiquid securities, quarterly repurchase offers, SPVs, Private Funds, PIPE transactions, SPACs