Churchill Asset Management, the $46-billion U.S. private capital affiliate of Nuveen, is making private capital investments more accessible to retail investors through non-traded business development company (BDC) products, according to Churchill’s senior investment strategist Alona Gornick.

“Long limited to institutional investors, BDCs are evolving to provide an opportunity for accredited investors, and even non-accredited investors, to tap private capital opportunities for as little as $2,500,” Gornick said in an interview. She noted the wealth advisors she is meeting on the road are looking for more and different ways to meet better goals for their clients.

A BDC is an organization that invests in small- and medium-sized companies to help the firms grow in the initial stages of their development, according to Investopedia. The private capital products are advantageous to advisors’ clients who are looking beyond the 60/40 portfolio model and can deliver more alpha for their clients, Gornick said.

"The turbulant economic times make private capital, namely private credit given its evolving fund structures, an interesting and opportune investment that goes beyond the 'set and forget' investment," Gornick said.

In February, Nuveen and Churchill announced the launch of Nuveen Churchill Private Capital Income Fund (PCAP), a perpetual-life non-traded BDC that offers individual investors access to private capital investments across the U.S. middle market, to take advantage of the growing demand by investors for private capital investments. PCAP primarily invests in middle market senior loans and junior capital. These types of products can be used by RIAs and wirehouses in a wide range of investors’ portfolios, she said.

“BDCs provide investors access to private capital investments that goes beyond real estate,” Gornick said. “We want to help investors hone in on the benefits of private capital investments – such as stability and income – and to help wealth advisors evolve to meet their clients’ needs.”

BDCs are required to meet extensive regulations, including distributing 90% of their profits to investors, which can generate a steady income for investors. “This has helped drive explosive growth in BDC product formation over the last few years, which should continue based on strong tailwinds in the industry,” Gornick said.

The other current factor that should support continued demand for BDCs is the turmoil and failures that have hit several banks since March, which will likely put some limits on the availability of traditional bank lending and create more opportunities for non-bank lenders, she noted.

In addition to the lower minimum investment, investors need a minimum net worth of $250,000 or $70,000 in net income and $70,000 in assets to qualify to invest in BDCs. Many states have separate requirements. For example, in Alabama, in addition to the above, requires investors to have a liquid net worth of at least ten times what the investment in a BDC is..

Gornick advised interested investors to ask their financial advisors for further information because the key to successful investing in these products is education, she said. Churchill is working directly with RIAs to help investors understand the risks and opportunities that the asset class presents. The firm feels those advisors who do not offer these investments to clients will miss a large opportunity to increase assets under management.

Because the industry is “still in the early innings of the democratization of BDCs, education is key,” Churchill said. The feedback Gornick said she is getting from advisors is that they need partners who can truly educate them on the space so they can make the appropriate recommendations for their clients.