Trying to take a bit of a survey on what typical economics are for secondaries funds...let me know your thoughts:
Funds less than $500mm: 1.5 and 15%
Mid-size funds with premium returns over many years (Hollyport and Willowridge): 1.5 and 15-20% with a ratchet hurdle (e.g. 15% with an 8% pref and 20% with a 12% pref).
Large funds with premium returns (Ardian, Strategic Partners): 1.25 / 12.5-15 with a ratchet hurdle between 8-10%
Large funds with lower tier returns (Stepstone, Adams Street, Hamilton Lane, Coller, Portfolio Advisors, Manulife): 1-1.25% and 10-12.5%.
Premium GP-led funds (ICG, Glendower): 1.25-1.5 and 15-17.5% with a ratchet hurdle between 8-12%
Do secondaries firms charge management fees based on invested or committed capital? Some of these large firms use a lot of back leverage
Commitment during the investment period then it reverts to NAV (which is hilarious cause the nav will probably be higher than commitment in 4 years if it is a GP-led strategy) or it stays on Commitment and goes down by 10% each year. I have also seen invested capital or even on NAV. Yes the large groups that focus on LP stakes use significant leverage (Ardian).
Thanks!
are the %s you listed the carry those funds charge?
Yes
Depends on If buyout, credit, real estate, venture, distressed, etc. Obviously 1L credit is effectively like creating a CLO with a lower duration and slightly higher yield, real estate and infra is lower cost of capital, others are more in line with equity type economies
This is hillarious. Ardian do not have "premium" returns, Adams street returns far outweigh Ardian doing 12% net IRR. Glendower is not a GP-led only shop.
Sometimes I'm really astonished by such performance comments.
It took me 2min to check on Preqin and realize that you're completely off and probably just threw something around.
Point on Glendower is correct though.
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