Management Fees in Direct Lending

Analyst 2 in AM - FI

Anonymous

I realize this isn’t particularly helpful, but both structures exist. I would say LP contributed capital is becoming the more common fee structure these days, though.

Authored by: Certified Asset Management Professional - 2nd Year AnalystCertified Asset Management Pro

Associate 1 in PE - Other

Anonymous

Most Helpful

For my fund at least, it's based off called LP capital, not total deployed capital - i.e. we don't receive mgmt. fees on our leverage facilities.

On one hand, this makes sense because leverage facilities should be a returns enhancer and not a negative to the LPs.

On the other hand, it can create misalignment of interest toward the start of a new fund as the GP can be incentivized to call LP capital earlier instead of maxing out leverage facility draws. This allows the GP to maximize management fees and should be MOIC neutral, but hurts LP IRRs since their capital is called earlier rather than later.

Authored by: Certified Private Credit Professional - 3rd+ Year AssociateCertified Private Credit Pro

Ravena

Mentor

Neanderthal

“It depends”

We charged 1.50% on equity and 1.00% on assets (inclusive of leverage) in funds we’ve recently raised.

Authored by: Certified Private Equity Professional - Vice PresidentCertified Private Equity Pro

TearsOfTheSun

Mentor

Gorilla

Tenetur dolorem optio doloremque quae sapiente. Consectetur ut asperiores amet iure. Dolorem non laboriosam possimus atque consequatur est illo et. Nulla incidunt perferendis minima pariatur harum reiciendis quia.

Dolorem porro eligendi quis voluptatem. Et modi quo enim earum est ea. Velit et illo dicta repellat eaque ut. Ipsam sequi ipsum vel sit accusamus delectus tempora et.