The Structured Equity approach represents a bundled investment in a company’s debt and equity securities. The debt investment provides the Fund with structural protection, governance rights and current income. The Fund will take a meaningful ownership position through the direct purchase of equity; conversion of debt or exercise of warrants, provides the opportunity for substantial capital appreciation and aligns interest with management teams that retain significant and typically majority ownership. The Structured Equity investment approach targets 30% annualized returns while taking risk more closely related to debt investing.

Through a Structured Equity investments approach, CPE takes a controlling equity position in portfolios and companies that it acquires and or invests in. The Fund will retain significant influence over all meaningful decisions through contractual rights and other features, incorporated in the documentation, which provide necessary controls. A typical Structured Equity investment has a combination of the following:

The Fund will target both distressed asset and middle market opportunistic investments in distressed asset portfolios and middle market companies that:

• Require investment amounts ranging from €1.5 to €15 million;
• Focus upon investing in middle market opportunities in basic industries including manufacturing and business services in companies that are achieving annual revenues of €10 to €100 million in annual revenues;
• Are not subject to technology risk or reliant upon the same;
• Have relatively stable earnings profiles; and
• Are owned by management teams and/or founders that require capital, and willing to give up controlling ownership in their company ("Target Market").

Evaluating Structured Equity investments combines credit analysis with the ability to assess potential equity returns. The Fund seeks companies that have the ability to pay a 10% to 14% cash coupon that also have attractive growth prospects. Although the Fund will make non-control investments, the General Partner will be active in all aspects of the portfolio companies’ strategic and financial management. The Fund focuses on making appropriate credit decisions, enhancing equity value and creating an attractive business model with numerous realization alternatives.

The Fund focuses on distressed portfolios and middle market companies that have:

• Talented, entrepreneurial management teams with significant ownership and a history of building successful businesses;
• Attractive growth prospects;
• Limited technology risk;
• Competitive advantages such as unique product features, brand strength or cost advantages;
• Positive industry trends;
• Attractive free cash flow dynamics; and
• A defensible market niche with barriers-to-entry.

Structured Equity investments in companies that reflect these characteristics allow the Fund to preserve capital, generate superior risk-adjusted investment returns and receive much of the benefits associated with each of senior lending, mezzanine and private equity investing, as noted below.