Private Equity Q&A: Kelly Ann Winget, Alternative Wealth Partners

It’s difficult raising money as a woman-owned investment firm. It’s also difficult to raise money from individual investors. It’s also difficult to convince them when some of the investments are in less PR-friendly industries. Greg Winterton spoke to Kelly Ann Winget, Founder of Alternative Wealth Partners in Dallas, TX, to learn more about her firm and its approach.

GW: Kelly Ann, for those who might not be familiar with Alternative Wealth Partners, tell us a little bit about the firm.

KAW: AWP is a Dallas-based private equity firm focused on building diversified portfolios of alternative assets on behalf of individuals looking for opportunities off Wall Street. Most people aren’t aware of all the opportunities available to them when it comes to investing as this type of investment strategy has been reserved for family offices and institutional investors. Think of us as your family office, and I would be the CIO (Chief Investment Officer). I believe that everyone deserves the opportunity to have access to generational wealth-building assets and strategies. We look at investing with a diverse and holistic lens, allowing us to build creative portfolios that align our mission with returns.

GW: Tax strategy is an integral part of how Alternative Wealth Partners allocates capital to underlying investments. Why did you decide to make this a pillar of your approach?

KAW: I was raised by two tax professionals – haha. I started earning money at a young age and made a lot of it, so I was doing my taxes by the time I was 15. The advantage to structuring our funds around tax incentives is that you can add 20-50% worth of gains back into the returns for the investors. When you can stack different tax programs on top of each other, then you make the income generated and the gains tax-advantaged, keeping more money invested, growing, and contributing to the markets. Private investors can be extremely impactful with their capital in ways that the government would never be able to do, so I try to work with investors who understand that because we aren’t paying that 20%+ to the Tax Man, we have to be intentional about how we are reinvesting those returns into our communities.

GW: Some of your investments are in less ‘PR friendly’ industries, like oil & gas, and ammunition. That’s a bold decision in this day and age. What’s the rationale here?

KAW: I am a strong believer in shifting the narrative around foundational institutions. I am from a multi-generational oil & gas family, born and raised in Texas, and have strong opinions about how we can change minds and infrastructure with the right leaders. The Exxon's of the world will always be the power company, whether it is oil or wind, solar or water. There has to be a blend of investing in the past to get to a more sustainable future, investing in the cheapest energy resource while building the expensive infrastructure to support the cheap energy of tomorrow. When you can reinvest the returns generated from oil into renewable energy projects, it helps subsidize the transition. Similarly in the ammunition business, if the right leaders are involved, we can shift the impact the industry has on the planet. I am an “America first forever, but like we have a lot of problems” person. I believe we have rights in this country, and everyone wants to be here for a reason, that should be respected…but also people need to be given the education and support to take advantage of those rights without the sacrifice of another person. If I control a controversial asset like an ammo factory, I can control the type of people who have access to bullets. If I have control over who has access to bullets, I believe I can help make the world a safer place, offering training, mental health resources, and safer policies around weapons. There is entirely too much money being made off tragedy in these industries. My goal is to change that, and I can only do that if I am putting money behind my mission (beyond a sticker on my car or a thought and prayer).

GW: You recently launched an Opportunity Zone fund. Tell us more about that, and why you think OZ’s still have potential.

KAW: Yes, I have teamed up with Rachel Vass, CEO of Syzygy Cities, to launch a $180mn Opportunity Zone fund. While the program is sunsetting, we believe now is our opportunity (pun intended) to showcase what this program can really do. For almost a decade, real estate funds have wasted this gift of a tax structure on lazy, unimpactful real estate developments like luxury multi-family, storage/warehouses, some affordable housing, hotels, etc. The traditional return on these funds is below 10%. As an investor, you have your capital gain dollars sitting stagnant instead of taking advantage of the patient high-growth opportunities in these OZs. While paying taxes is terrible in general, paying a lower tax today to avoid a higher tax tomorrow is my favorite strategy. We use the 10-year holding requirement to really be aggressive to maximize the exit potential and benefit from a tax-free exit at the end of the fund.

Another advantage to working with an OZ fund like ours is our strategy behind our capital stack.  We leverage multiple funding sources to reduce our equity funding requirements, essentially building 20-40% of our capital out of free money (grants, government funding incentives, tax credits, etc). Investors don’t have to use capital gains to invest, either. They can use cash, retirement funds (like IRAs and 401K), and in-kind or DAF dollars. The returns we are targeting can be appealing to any type of capital and the capital gain tax-free exit is the cherry on top of this deluxe sundae of a private equity fund.

GW: Finally, Kelly Ann, 2023 will see your firm turn three years old. What are some of the lessons that you’ve learned so far, and do you have any specific plans for the next 12-18 months?

KAW:  I think the most important lesson I’ve learned is to trust my experience and my vision. What people don’t think about is that the largest, most successful asset managers in the world were once emerging managers at 30. I am an investor’s opportunity to take advantage of 15 years of upside before I’m one floor below Buffet.

We are hoping to raise $180,000,000 into our Opportunity Zone Fund, launch our second vintage (AWP Diversity Fund II-$150M) to continue our investment strategy into growing small/mid-sized businesses and enjoy a little bit of life around the globe with my wife and children.

Kelly Ann Winget is Founder at Alternative Wealth Partners