Private equity for the masses?

Private equity for the masses? Philadelphia real estate investors Michael C. Forman and David Adelman filed Feb. 22 with the Securities and Exchange Commission to raise $1.5 billion for a new fund, Franklin Square Investment Corp., to offer private equity to the masses.

"The market for asset-based alternative investments has expanded dramatically," said Keith Allaire, an investment banker at Stanger & Corp., of Shrewsbury, N.J., who worked on the Franklin Square deal. Private equity is new to the market, which has been dominated by real estate. Target customers make at least $70,000 a year and have $70,000 already invested," Allaire said.

Franklin Square will be managed by GSO Capital Partners L.P., of New York, which in January agreed to be acquired by hedge fund and private-investment manager the Blackstone Group L.P. The fund says it will pay dividends. It will not be traded on any exchange.

Not everyone salutes attempts to democratize private equity. "When you can't raise money in private-equity circles, who do you go to? The public," said Burton J. Greenwald, a Philadelphia mutual fund consultant.

"What Ira Lubert and Dean Adler are doing in the private-fund business for larger investors, we're going to do in the retail channel," Adelman said, citing Franklin Square's Cira Center neighbors, who run the $7 billion-asset Independence Capital Partners group.