Hello, Looking to gain some insight on how private equity pref investments are structured. From what I understand 8% is the norm. Is the dividend cumulative or non-cumulative and compounding or non-compounding? Thanks!

I second Macabacus as a good source for learning this stuff. Also I think 8% is too low for private equity, as 8% is the hurdle most funds need to meet before carry kicks in so you'd have to back-lever an 8% pref to generate nice returns. PE / mezz players would probably prefer to play in the 10% - 15% range. Whether PIK is allowed depends on the nature of the business / project - if it's in growth mode, PIK would be allowed during the growth / construction period.

Private Equity Preferred Stock Investment Question

oldhead

Baboon

There are lots of different ways pref can be structured, but standard is for PIK interest to be both cumulative and compounding. Macabus is a good first source for learning about this type of thing.

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NuckFuts

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Private Equity Preferred Stock Investment Question

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