Funds with above market fees?
Anyone knows who these are / have any backstory? I know there are a couple well known examples like KPS charging 30% carry and Advent not having a hurdle rate. Any others?
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Hurdle rates: going, going, gone? | July 2017 | MJ Hudson
h&f
I heard ABRY charges 25% or 30% performance fee
Excellere
I used to work for a real estate fund that charged a 30% carry over a 10 with a 100% catch-up. It's a LMM fund but it has one of the best track records in the REPE business.
Why didn’t you stay for partner then lol, sounds perfect
Which one?
I’ve regularly charged 30 over 8, 65 over 12 with a large family office. If you have a strong track record and bring good deals you’d be really surprised what capital partners with a flexible mandate will accept.
That's your promote structure on a fully discretionary fund designed to invest as an LP or co-GP at the deal level? If so, that's amazing.
Those numbers seem more like a JV-/deal-level waterfall, not fund level.
IDK if they still do this, but HIG had 25% carry, and Vista had different LP classes where you could pick between like 2/20 or 1/30 (might be getting the exact numbers wrong but the idea is there, lower mgmt fee w/ higher carry or vice-versa).
Vista is 1/30 over 10 and 1.5/20 over 8, with a GP commit of 10% which is pretty big (looks like Bain after their 2008 vintage which makes sense since this is their "comeback fund" after lackluster returns and low DPI in their recent funds v thoma)
There are a ton of funds that are various times have had higher than 2/20. Bain did at one point. HIG. A number of the VC funds. Usually hard to keep those fees and as you get bigger fees go down below even the 2/20.
VC funds typically do not have a preferred return - the "hurdle" is simply return of capital. Most buyout funds are 8% and frankly even that is pathetically low given that they all claim to target 20%. Bain has been 6% for ages, which is also insane, but they can get away with it.
Bain gets away with it because the hurdle doesn't matter when returns are negative
…? Hurdle ESPECIALLY matters for low performance funds, it’s the whole point of them
Carry is typically higher for turnaround heavy firms like KPS btw. Or at least according to preqin data showing fees by strategy.
There are a small number of lower middle market growth equity firms that charge 2.5% and 20%. The 2.5% was when the firms were smaller and some have been able to maintain north of 1bn fund size.
As one poster mentioned, almost all high quality vcs charge 2.5% and premium carry. Either a step up to 25-30% or in the case of true tier 1 vcs, 25-30% off the bat.
Adding to this...VC has the stickiest returns which means paying top performers is more accretive to returns than say vanilla LBO PE.
I believe Gauge Capital charges premium carry, but recent funds have been absolutely knocking Ut out of the park so net returns for LPs are still extremely attractive
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