No Carry on KKR and Carlyle private credit vehicles
Came across this article on LinkedIn
The temporary effect of a weak economy, or the sign of things to come? If they did get rid of or significantly cut carry, how would that affect the prospect of becoming a millionaire at a PE fund?
how will i ever financially recover from this...
This doesn't affect the prospect of becoming a millionaire at a PE fund. This affects Private Credit, for which the carry pool was already smaller to begin with.
This new fund is an Evergreen vehicle which makes it somewhat niche and it probably isn't supported by a dedicated team. This step was probably taken to address the alignment issue of having carry in a perpetual fund - i.e. the fact that the fund itself will last longer than the careers of deal team members. IIRC KKR pools their carry across multiple funds and products which means the credit IPs will be relying on their mainstream products to generate carry for them.
Very much the cynic in me but all of the publicly traded PE companies are going to slowly start reducing individuals carry as the company itself comes under pressure when/if fundraising dry's up for these funds (will happen slowly over the next 5-10 years) as that's how they make a ton of their profits these days (see asset gathering). If things dry up on new management fees they'll just cut carry for employees to keep the machine moving and try and pump their stock up. Again very much the cynic side but very feasible given their being publicly traded and top execs wanting to max their comp (aka stock related income).
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