(Bloomberg) — Canada’s Sagard Holdings Inc. is starting a private equity fund for retail investors, the latest example of an alternative asset manager extending its reach beyond institutional investors and ultra-high net worth individuals.
Sagard, a unit of Power Corp. of Canada, will target Canadian accredited investors with at least C$1 million ($695,000) in financial assets or more than C$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 credit fund with more than C$430 million for the Wealthsimple Financial online investment service, which is also controlled by Power.
Sagard Chief Executive Officer Paul Desmarais III said the firm’s private equity funds are usually raised with a C$10 million minimum investment. For this retail fund, it will be C$25,000.
“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 held more than 50% of global wealth in 2023, they represented about 16% of the alternative assets under management, or approximately $4 trillion, according to consulting firm Bain & Co. Alternative managers have put more focus on attracting retail holders recently as they struggled to raise fresh capital from institutions.
BlackRock Inc. and Partners Group Holding AG teamed up last year to create a “one-stop portfolio” giving retail investors access to a variety of private assets. Brookfield Asset Management said in September that it plans to launch a private equity product for rich individuals.
“The product construct 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 some clients will seed the new fund with C$50 million in initial capital, mainly to acquire interests in middle-market private 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% over an 8% hurdle.
“We’ve really spent a lot of time building this specifically with investor liquidity in mind,” he said. “But financial advisers will typically only recommend these funds to investors who don’t need their money near term because the truth is that the underlying assets are still illiquid. That’s something investors considering investing in private equity have to 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 to Offer Private Equity Product for Retail Investors
Private Equity Finds Yet Another Way to Keep the Money Coming In
Desmarais Family’s Sagard Seeks Growth With Private Retail Funds