CNL Strategic Capital: 93% Voted Yes on a 25% Buyback and It Still Failed. What Is Left Is 2.5% a Quarter

What CNL Strategic Capital is

A Delaware LLC that buys controlling and minority stakes in "durable middle-market U.S. businesses," financed partly with loans it makes to the same companies. It began operating in February 2018, has raised over $1.3 billion, and held 19 portfolio companies at the end of 2025 (proxy statement, accession 0001999371-26-002053). It is managed by CNL Strategic Capital Management and sub-managed by Levine Leichtman Strategic Capital, an affiliate of the private equity firm Levine Leichtman Capital Partners. At August 31, 2026 it reported a total NAV of $1,525.7 million on 37.6 million shares, in six classes whose NAV per share ranges from $39.32 (Class D) to $45.43 (Class S) (Form 8-K, accession 0001999371-26-021270). There is no market for the shares. On January 27, 2026 they were held by 15,287 holders of record.

The promise, and what was put to a vote

The 2024 registration statement (accession 0001999371-24-002410) says: "Our board of directors intends to contemplate a liquidity event for our shareholders on or before November 1, 2027," with no obligation to complete one. It lists four forms a liquidity event could take: a sale of the assets followed by liquidation; "subject to an affirmative vote of a two-thirds (2/3) super-majority of our outstanding shares, a decision to continue as a perpetual-life company with a self tender offer for a minimum of twenty-five percent (25%) of our outstanding shares"; a merger for cash or listed shares; or a listing.

In November and December 2025 the board's audit committee ran that assessment with Robert A. Stanger & Co. as financial advisor. Its conclusion, per the proxy: "continuing the Company as a perpetual life vehicle where shareholders can access liquidity through the existing share repurchase program was in the best interests of the Company and its shareholders." The other options "were less likely to maximize pricing and shareholder value due to the current maturity level of the Company's businesses, the lack of direct public market comparables and the limited current appeal to institutional investors."

What went to shareholders was a version of the second option, with a different shape. The prospectus language says a self-tender "for a minimum of" 25%. The proposal was for the company to repurchase "up to the requested liquidity percentage," defined as the NAV of shares actually requested at a measurement date divided by total NAV, "provided that it will not exceed 25%." It could be delivered through higher limits on the regular program, a single self-tender, or both, over four quarters. The vote required was the same: two-thirds of all outstanding shares, and the proxy spelled out that an abstention "will have the effect of a vote AGAINST."

Three meetings and a text message

The count is the story. Of the shares that voted, 93.3% said yes. The plan needed 24,205,330 yes votes and got 20,122,701, 4.1 million short, and roughly 14.7 million shares never voted at all. In a fund held largely through brokerage accounts, many owners never return a proxy; the adjourned meetings and the text-message campaign suggest that was the obstacle here, and it is why a two-thirds-of-outstanding threshold is hard to clear. The outcome is not that shareholders rejected liquidity. It is that most of the ones who cared voted for it and the ones who did not vote decided it.

After the vote the company said it "intends to continue to administer its share repurchase program with no change to its terms," and that the program "has been sufficient to meet all proper share repurchase requests, including requests during the period of time that the recent proxy vote was being pursued." It did not say whether the board will revisit a liquidity event before the November 1, 2027 date in the prospectus. The only forward-looking sentence concerns raising money: the board "will continue to evaluate the Company's options to raise capital beyond the Public Offering, which is scheduled to expire on November 1, 2027."

The queue is getting closer to the cap

The program allows repurchases of up to 2.5% of total NAV per quarter, measured on the NAV at the last day of the month before the repurchase date, and 10% a year. Here is how much of that each recent quarter used:

The "used" column is our arithmetic from the company's figures. June's $34.3 million was 92% of what the cap allowed. Every request so far has been approved in full, per the June 10-Q, and the company is still selling more shares than it buys back: $37.3 million of net offering proceeds in the April-June quarter against $34.3 million repurchased. But a year earlier it was $35.2 million against $11.2 million. The margin has gone from about three to one to roughly even.

That is the context for the credit line amendment filed two days after the vote. Since May 29, 2026 the $50 million Valley National Bank line "may be used to finance the repurchase of the Company's equity securities from its equity holders in an amount not to exceed 90% of Company's trailing six months new net investment proceeds excluding reinvested distributions." That amendment set a maturity of August 15, 2026; an August 13 amendment pushed it to November 15, 2026.

The part that is working

On its own reporting, the portfolio has done what it said it would. NAV per Class I share went from $38.45 at November 30, 2025 to $38.79 at February 28, $39.46 at May 31 and $40.08 at August 31, 2026. The company attributes August's gain to increases in the fair value of 15 of its 18 portfolio companies. Its return table, filed September 24, gives Class I a 9.0% return over the year to August 31, 2026 and 10.1% a year since April 2018, with distributions reinvested; Class A, after its upfront sales load, 8.8% a year since inception.

The distribution is not where that return comes from. Class I receives $0.104167 a month, $1.25 a year, about 3.1% of NAV. For January to August 2026, the company reports that 42.8% of declared distributions were covered by net investment income and 57.2% were "in excess of net investment income and net realized gains," which it says "consists of distributions made from offering proceeds." Net investment income in that period included $2.2 million of expense support from the manager and sub-manager. None of that makes the payout unsafe at its size, but it means a holder is being paid mostly out of new investors' money, and the value is in the NAV, which you can only reach through the repurchase program.

What a holder can do with this

• The next deadline is about November 1. Requests must reach the repurchase agent "on or before the date which is (60) days prior to the date the Shares are redeemed," and the repurchase date is generally the last business day of the quarter. For December 31, 2026 that is around November 1. The September 30 window closed around August 1.
• You get the NAV of the month before. A December 31 repurchase is priced at the November 30 NAV. The August 31 figures, published September 24, are $40.08 for Class I, $39.63 for A, $39.51 for T, $39.32 for D, $44.96 for FA and $45.43 for S.
• The minimum is 5% of your shares. The program repurchases "all or a portion of their shares (at least 5% of his or her shares)."
• If the cap binds, you are prorated. The prospectus says that if more shares are submitted than the company can buy, "we will repurchase shares on a pro rata basis," and that there have been no unfulfilled requests "since inception" (supplement of August 24, 2026, accession 0001999371-26-018566). At the August 31 NAV the cap is about $38.1 million a quarter; June's repurchase was $34.3 million. The company "may use sources, including, but not limited to, offering proceeds and borrowings" to fund repurchases, and is not obligated to repurchase at all.
• Watch the November 1, 2027 date. The prospectus language about contemplating a liquidity event by then has not been withdrawn in the filings we read; the board has told shareholders its preferred course is to remain perpetual.

The company's full filing record, with links, is on its vehicle page. A related case of a non-traded vehicle whose board declined a sale is StratCap Digital Infrastructure REIT.

FAQ

All figures are from the filings cited, read on EDGAR on September 25, 2026. The percentage of the cap used each quarter, the votes needed, turnout and the distribution yield on NAV are our arithmetic from the reported figures. This is analysis of public documents, not investment, legal or tax advice.