Hello, i am glad to find here great sepcialists and discuss with them questions.
Currently i' am writing dissertation about investment funds / innovations. I've noticed if IRR higher than hurdle rate, then return splits: 20% to management company and 80% to LP. But here are few questions:
1) Does GP earn carry interest if fund hasn't closed? For example investors returned all cash flows and earned 10% IRR without selling the business. But further returns of the business may fluctuate in that case how we should pay the carry?
2) Some of funds fix hurdle rate to 8% or 10%. How do you think, which one is better to use? Do the PE funds use CAPM or WACC as hurdle rate?
Thank you! : )
P.S. if someone want to write an article with russian student you are welcome
p.s. p.s. the ranking system in WSO from chimp to human especially applicable to Russian students