Do MF PE funds have smaller individual investment return hurdles than LMM PE funds? And why?
Just wondering if bigger funds have lower hurdle rates to meet as they probably invest in bigger projects with lower growth rates than those in a smaller deal size universe.
Yes, they do. Because it's orders of magnitude more difficult and meaningful to LPs (especially institutional ones e.g. pensions, endowments, etc.) if you generate 10-15% IRR on $5b than 30-40% IRR on $50m. Same idea it's better for them if you return 2x on a big number than 4x+ on 1% of that capital.
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