What's a side fund in private equity?
Hi guys:
What's a "side fund" in private equity please? For example, Carlyle has a side fund; how is that different from the main fund in terms of how they work and invest?
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I didn't see anything relevant come up with I googled carlyle side fund but I'm guessing it's a fund raised to put more capital into portcos in a pre-existing main fund, under the assumption that the main fund is fully deployed
Asset managers (including PE) want to both have good returns and grow AUM - both ways to grow fees.
Therefore, PE firms will raise more than one "type" of fund in order to accumulate AUM. They'll have their core, "flagship" fund, which will allow for their bread and butter LBOs, but will then look to raise different sorts of funds to grow AUM (and fees). Examples - small / mid cap fund (deals that would not have enough scale to move the needle for the flagship), APAC fund (non-core geography for flagship), long-date fund (in-vogue today - hold assets outside of the typical PE hold period), growth equity fund (outside of core Flagship LBO strategy), etc. etc.
One example that comes to mind is LGP - they were recently raising a flagship fund of $10b and also raising a $5bn middle-market fund called "Jade" to work on smaller deals and write smaller checks. They had a slightly different LP base and different GPs doing deals for that fund.
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