The forever fund: evergreen capital in private equity

The traditional private equity fund is a 10-year close-ended vehicle, with a five-year investment period and an average holding period of three to six years. Some argue that the time-limited model encodes short-termism into the private equity perspective. The manager’s decisions to buy, hold and sell investments are influenced or even ordained by the ticking…

Private equity fund terms – 2018’s key takeaways

MJ Hudson recently published its latest annual survey of private fund terms. We examined a large, diverse sample of closed-ended funds in the private equity, infrastructure, real estate, venture and private debt sectors, where we have advised either the fund manager or a prospective investor. Here are six key takeaways for LPs: 1. Fee rates…

Carried interest – going beyond ‘two and twenty’

Carried interest is believed to have originated as long ago as the fourteenth century, in Renaissance Italy. Land-based merchants would commission ships to export their merchandise to ports around the Mediterranean, with the ship’s captain and other crew members receiving an “interest” in the profits earned from the cargo that they carried. Today, carried interest…

LP Intel

Trumped-up terms? Does it pay to be an American GP? With an increasing tide of capital making its way over to the U.S., it is important for investors to be able to distinguish the principal differences between U.S. and European fund terms. Although managers on both sides of the Atlantic broadly adhere to certain core…

Co-investments: Beware the bear traps!

A co-investment is where an LP makes an additional, separate investments in a target company in parallel with the main investments made by a fund (the Sponsor Fund) in which, oftentimes, the LP is itself an investor. We provide seven top tips for GPs and LPs to bear in mind when making co-investments. We can…

FCA warning to asset managers – Tax-advantaged sector will need to change

The Financial Conduct Authority (FCA) recently published its Management Market Study Final Report, a hard-hitting document hiding behind a rather soberly named title. In November 2016, the FCA’s interim report found evidence that suggested that there was weak price competition in a number of areas of asset management, and this finding was confirmed in the…

The new year; (More) new guidance

New industry guidance increases pressure on managers to provide investors with more information about their funds, especially fees and expenses. But how much will really change? New Professional Standards Handbook InvestEurope, the trade association formerly known as the EVCA, late last year published the latest edition of its Professional Standards Handbook. The Handbook covers the…

Fees and offsets: Lessons learnt

Regulators are gunning for fund managers over opaque or dubious fees and expense arrangements. How can managers and investors get ahead of the game? With most of the new financial regulations on the alternative assets sector having come into effect, regulatory agencies are now devoting more time to scrutinizing the newly-regulated industry’s activities and practices,…

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