PE Carry London
Hi guys,
Would be curious to hear about carry comp in London. Is it similar to the US? If anyone has some datapoint that’d be appreciated.
Also, curious about private credit.
Cheers
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Take with a pinch of salt. Overheard from my team that european pe funds in London tend to give carry at more junior levels, whereas American funds in Ldn pay higher salaries, but they wont give you carry until reaching principal or above
European funds give carry at junior levels because they are stingy with cash comps and they know it will take long time to realize anyway given typically European waterfall by that time you will be out
Adding to the above, the "carry" European funds typically give you is not real, it is shadow carry which combined with an European waterfall means that if you are not around for the next 8+ years at the same fund you won't see a dime of it
What does shadow carry mean? Not vested?
Not sure what shadow Carry has to do with vesting because many funds allow for vesting shadow or not but anyways
I see both of you are confused. There will be a vesting schedule on shadow carry (which will mimic real carry in most aspects). The key difference is that once you are due to start receiving proceeds on your vested portion as the fund gets into carry (after 8 years), with shadow carry they have no contractual obligation to pay you out if you are not at the firm anymore (it is a purely discretionary remuneration scheme that so happens to mimic carry), whereas for real carry it is much harder to not pay you out (you will see the money even if not at the fund anymore, there are some clauses to fuck you but much much harder to action). Given European funds are on European waterfalls which take 8 years to get into carry, for you to actually realise your shadow carry you need to stick with the firm for 8+ years, which despite the better culture and WLB present in European funds is not a realistic base case. So when you hear shadow carry just think of funny money or write it down to 0.
The proceeds are not just on vested portion - vesting accelerates upon realization. vesting has to do with what you retain. You're generally right but many funds do indeed let you keep shadow carry. It's fund specific and people should ask when interviewing not read random threads here. For example some funds will also change waterfall for shadow carry. Much more nuanced than this thread.
So what is the substance of this post? I am generally right but there are fund specific nuances? Well yeah? I don't think I ever implied otherwise. I also would think that assuming the worst when it comes to carry for juniors is more prudent versus relying on what they sell you during interviews
I don't want to argue, I explained how vesting works. I also mentioned firm specific nuances which are very relevant and don't follow the narrative you described. I was being magnanimous with the you're right. I have first hand and knowledge of how carry and shadow carry work but anyways leave it to you all to discuss.
SVP in PE (MCD capital)
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