Dan Ives Launches A $200 Million AI Fund, Opening Private Companies To Public Investors

Dan Ives is putting his name behind a new $200 million publicly traded fund designed to give ordinary market investors exposure to private companies building artificial intelligence technology and the infrastructure supporting it.

Ives Ultra AI Opportunities Inc. priced its initial public offering at $10 a share, selling 20 million shares for gross proceeds of $200 million, the fund said Wednesday. Shares are expected to begin trading on the New York Stock Exchange on Sept. 30 under the ticker IVAI, according to the fund’s IPO announcement.

The underwriter also has an option to purchase as many as 3 million additional shares to cover overallotments. The offering is expected to close Oct. 1, subject to customary conditions.

The fund is structured as a non-diversified, closed-end management investment company and plans to concentrate heavily on AI-related businesses. Under normal conditions, at least 80% of its net assets, plus borrowings for investment purposes, will be invested in companies whose primary businesses involve the design, development, production, implementation or commercialization of AI or AI infrastructure, according to its SEC filing.

The portfolio will focus primarily on equity and equity-related securities of late-stage private AI companies in the United States, with some exposure to businesses outside the country. The fund can also invest selectively in publicly traded U.S. companies that meet its criteria.

Ives said one purpose of the vehicle is to make investments in private AI businesses available beyond venture capital firms and other investors that traditionally have greater access to private markets.

“In this AI revolution, so many of the companies leading it will be private,” Ives told CNBC. He said the aim was to create “a public vehicle to buy some of these great private companies.”

Ives serves as chairman of the board of managers of Ives Ultra Capital Management, the fund’s investment adviser. He is also a partner and senior managing director and analyst at Yorkville Ives & Co.

But Ives will not personally select the investments held by IVAI. The SEC filing states that he is not a member of the adviser’s Investment Committee and will not be involved in recommending purchases or sales of securities or making investment decisions for the fund.

Ed Leathers is the fund’s portfolio manager, while Jeff Leathers is CEO of Ives Ultra Capital Management. Both also sit on the adviser’s board of managers.

The structure gives public-market investors a route into assets that are generally harder to buy than listed stocks, but the regulatory filing also lays out additional costs and risks associated with that exposure.

The fund estimates total annual expenses at 3.10% of net assets attributable to common stock, including a 2% management fee, 0.15% in acquired fund fees and expenses and 0.95% in other expenses, according to the SEC prospectus.

Private company shares are also generally less liquid than publicly traded securities, and determining their value can be more difficult because they do not trade continuously on public exchanges.

The fund may gain some of its exposure through private funds and other investment vehicles. Those investments can carry their own management and performance fees and may be difficult or impossible to sell quickly, the SEC filing said.

Investments in private funds are expected to account for less than 15% of net assets, while the fund can also use forward contracts, special-purpose vehicles and other structures to gain economic exposure to private businesses.

IVAI is also using an unusual tender-offer structure intended to address a risk common to closed-end funds: shares can trade below the value of their underlying assets.

Within the first 12 months following the IPO, the company must complete a tender offer allowing shareholders to sell shares back at what the fund calls its “Redemption Value,” according to the document.

Until that process is completed, net IPO proceeds will be held in an interest-bearing trust account maintained by U.S. Bank and invested exclusively in money-market funds. The remaining capital can be deployed into the fund’s intended investments after completion of the tender offer.

The fund said in its IPO announcement that it has up to 12 months to propose its initial private AI investments before giving shareholders the opportunity to tender their shares under the policy.

Ives said investors had repeatedly asked him about ways to get exposure to privately held businesses participating in the AI expansion.

Interest in broader access to private investments has also shown up in recent polling. A national survey of more than 2,000 U.S. adults conducted by Propeller Insights for investment platform DealMaker found that 66% believed everyday investors were being held back from the country’s highest-growth private investments. Fifty-one percent said they no longer viewed the stock market as the best place to build wealth. The survey was conducted between July 11 and July 20 and released in September by DealMaker.