KPS Capital Partners
Can anybody speak to KPS Capital Partners? Seems like a very sizeable firm that doesn't have its name tossed around as much. Any info on how they recruit, compensate and invest would be much appreciated!
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Don't know a ton but I heard their fee structure is 1/30 which is pretty badass
Curious as to how you don't know a ton about their firm but somehow have insight into their fee structure haha
Their fee strucure is well known in the industry because of the sheer audacity to ask LPs to fork over 30% at a time when the industry is facing fee pressure. I mean, not even Blackstone could attempt this. Of course there's a reason KPS investors pay those fees.
PE has not faced any fee pressure. Hedge funds are a different industry. In fact more Pe firms have been reducing hurdle rates
Of course, the PE industry is facing fee pressure. It's simply not very evident to observers outside the industry. Headline fees may not have come down, and that's simply because of LPs moving more of their assets from public to private markets, and thus taking away their own leverage when negotiating with GPs.
But GPs have yielded to the pressure in more subtle ways - fee-free co-investments with large LPs asking for (and getting) co-invests over 50% of their primary capital, thus cutting overall fees in half, the increase of management fee offsets from 0% to 50% to 80% to the now almost universal 100%, the reduction in headline management fee from 2% to 1.75% to 1.5% as fund sizes grow, discounts for first closers and / or early closers etc.
Hurdle rates reducing or even going away is not that big of a concern and does not actually lead to significantly better economics for the GP given that the firms who ask for that will almost certainly pass the hurdle anyway. It simply brings forward cash from the waterfall rather than altering the absolute amount. Yes, the NPV to the GP is slightly better but it's more of a power move (yet less subtle than KPS' 30% carry) than anything else.
UMM distressed equity player - selling point is "we partner with bankrupt companies" rather than loot them.Well respected by our FoF group. 6b last fund size.
Other distressed funds of their size and vintage have shit the bed once they got too big (excluding clearlake) but they are apparently doing well.
Focus on industrials and manufacturing.
They are currently attempting an aggressive DIP financing / stalking horse bid for Briggs & Stratton that’s being litigated if you want to follow something current on them.
Incredible shop IMO. I had a second round with them and it was by far the most intensive interview I had.
Any additional color you can share on both rounds?
As mentioned above, they are a distressed fund that focuses on operationally distressed companies, ie. companies that are really fucked and need a phenomenal turnaround. They have managed to built a great track record by buying and turning around business that were heading to liquidation and that nobody wanted. Known to partner with Unions to save businesses. Due the the nature of the companies they buy, especially at the outset, it's a very hard-working place, there's just no getting around around getting your hands dirty when you invest in that space.
Does "getting your hands dirty" = sweaty culture?
Not necessarily, as I mentioned in my earlier post, these guys buy EBITDA negative businesses that no one else wants to touch and then go and live on site while they turn around the operations. When I think of sweaty culture, I think more of places that have imported bad behavior from banking (ie. having to produce massive decks for their IC, having a "everything needs to by done by tomorrow am" and "we don't care about junior's time" culture with a lot of expectations for face time and over analysing everything).
do they compete with cerberus?
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Anyone know of their previous b-school exits?
Can anyone speak to culture/hours at associate level here?
Any updates on culture at the associate, senior associate and vp levels? Seems like an up or out environment with a good amount of turnover.
Any sense why they are so lean at the senior and mid-levels? With so much AUM it feels like they could easily hire more people.
They are so lean because they run their portcos the same way to make 5x each deal
Any updates on hours the associate level? Headhunters?
They work w/ SearchOne. Very intense culture and a lot of hours
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