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
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