An unabashedly right-wing business development corporation is seeking to raise $500 million in an initial public offering so it can fund companies involved in fossil fuels, firearms and other increasingly controversial sectors being shunned by proponents of “socially responsible investing.”
Decrying the rise of “left-liberal bias” in so-called impact investing, Freedom Capital Corp. on Tuesday filed a registration statement with the Securities and Exchange Commission along with a prospectus on the plan to sell 50 million shares of common stock at a price of $10 a share.
The registration comes more than a year after the firm’s management, including former FBR & Co. investment banker Jeffrey McClure and former U.S. Ambassador to the United Nations John Bolton, launched what it states is the first asset manager focused on “investments that strengthen America and its allies” through energy independence, cybersecurity and firearms freedoms.
“Current divestment movements are choking off capital to critical industries in the U.S. that support our basic freedoms,” according to the Arlington, Va.-based firm’s literature. “Freedom Capital is an Impact investment firm focused on investing in industries that promote the prosperity, security and freedom for the Unites States and its allies.
“These industries include those that promote and enhance energy independence, agriculture independence, second amendment rights, and defense sector industries.”
Impact investment funds have grown from 55 in 1995 to 925 last year, according to Freedom Capital, amounting to $6.7 trillion. The growth in SRI is not representing “the investment objectives of a massive percentage of American investors,” according to the firm’s literature. “Freedom Capital believes the current agenda driven investment landscape represented by SRI/Impact Investing is disproportionately focused on liberal ideals.”
In a self-description of its investment philosophy, Freedom Capital complains that most impact investing choices unfairly raise the cost of capital for businesses it claims “assist or are the guardians of American freedoms.” FCIM describes its actions as “American Impact Investing.”
Freedom Capital believes the rise of SRI has also driven divestments from the energy and security sectors as well as gun manufacturers, limiting access to capital for such firms. But the success of the movement has also proven that the impact investment model can work, so Freedom Capital intends to utilize the socially driven principles practice in its favor.
The company plans to invest in senior secured loans, second-lien loans and common/preferred equity of companies that match its investment criteria. It expects to invest in first-lien senior loans carrying between 3%-7% rates above Libor and second-liens between 6%-12% over Libor, as well as subordinate loans and equity.
Freedom Capital gained attention in March when the firm filed its initial registration statement. At the time, the growth in SRI-driven funds demonstrated that “capital markets have realized the importance and influence of mission driven capital,” thus supporting Freedom’s own plans to raise funds for the companies it backs.
In an article onThe Huffington PostWeb site last spring, a blogger described the company’s “bare-bones website” as being top-heavy with patriotic imagery of “bald eagles, American flags, men with guns, men on horseback, fighter jets and more men with guns.”
“This sort of imagery might lead one to think that Freedom Capital is a joke of the sort Stephen Colbert or corporate pranksters The Yes Men might dream up, but it’s legit,” the Huffington article stated. “It has an SEC filing, a Crowdfunder page and everything.”
Freedom Capital notes its management team includes advisors that have raised over $25 billion in equity as investment bankers and overseen $2.5 billion in assets as fixed income asset managers. The company plans to maintain a focus on long-term credit performance and capital appreciation.
The minimum purchase price of the shares is $5,000 for investors, and the full public offering will proceed once the company has exceeded $2.5 million in private placement sales (with a deadline of Sept. 16, 2016), according to the prospectus.