Fee-free carry-free for employees
Hello, I wanted to start a thread on all the MFs that offer fee-free, carry-free investment in the funds for their employees. I know this is the case at CD&R, what about the others MF? If you think about similar perks, please also let me know
This is very common. GPs typically must “commit” to put a certain amount of their own capital into a fund alongside LPs. This fee-free investment is more typically referred to as co-invest.
It’s commonly offered to employees at various levels and depending on magnitude and structure (cash vs levered, etc.), can be viewed as a perk or a burden.
Not sure this is the case at every GP, my fund only offers 50% discount on mngt fee and carry for example
Could you name some MF GP that you know ?
Fun fact simply buying stocks would have outperformed the last 5 years of doing this coinvest
If only I was invested in Sandisk Micron and co
MF PE employee coinvest is one of the biggest non-perks ever unless you’re at a truly high returning fund. The illiquidity factor alone means it almost never makes sense for early/mid level folks
Depends; I think the key factor is whether or not you're getting free (or cheap) leverage with your employer. If your employer is offering 3:1 leverage (like some of these other commenters are noting) that's pretty attractive, even if overall MOIs / IRRs are meh compared to the stock market.
One MF offers fee free carry free coinvest with free leverage (3x or something ridiculous). But the liquidity (and returns) are dogwater.
A small fund offers fee free carry free where IRRs are 20%+ and terms are 3-5 years. (But this is fund investment and deal specific is only for the firms follow on investments.)
That’s what matters. There is pressure from higher ups if you don’t do the coinvest at that MF. That’s a culture thing but something to keep in mind. At that point it’s not really a coinvest where you pick the best deals.
Silver Lake offers fee-free co-investment with 3:1 leverage (i.e. you put in $1 and they will put in $3), up to a leverage cap. Based off of a set $X per $10M of capital invested; no cherry-picking allowed in terms of deals (i.e. you will be co-invested in all deals during your time there).
Oh wow its insane, do you any other?
I'd say most MFs (at least) do it that way. Issue is that leverage is too expensive in most cases
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