Can you please help me with figuring out an answer to the following question: how much on a YEARLY basis would I have if I join PE fund of funds on the following conditions:
- total AUM6b, but my office (Europe) is managing 2b (so I guess my carry would be calculated on assets my office manages)
- I'd get 0.3%
I'm struggling to estimate how much would it give me on a yearly basis... Any help appreciated
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Johny, your username is already a clear sign of superior intellecutal power. I would guess you multiply 2 bn by 0.03 which gets you to 6 Mio USD. Sure that's much less than such a PE expert like you is worth but still more than a random guy in a high school in Nowhere/Ohio will earn in his lifetime. Here is the transcript of how I imagine your interview: PE partner: Hi Johny, I want to offer you 30 bps on 2bn as carry... Johny: ok PE partner: Welcome on board! Johny: Wait a sec...I need to calculate your offer - I'll be back next week...
Wouldn't it be .3% of 2% (management fees) of $2bn?
or $120K?
That number makes sense...
You did say "carry" so...I'd assume FoF has 10% of profits over 8% hurdle. Given a 5-year fund return of 2.0x on $2.0B, that would give $4.0B - $2.9B = $1.1B of profit x 10% = $106M x .3% = $318k over 5-years = $64k / yr
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