PE HUB Wire Highlights, 4.22.19

Instamed final bids due end of month; North Castle Fund VII raises $400 mln; The rise of super carry

Happy Monday. Or as we say it here, the day after “Game of Thrones.”

The Financial Times has a report on the trend of some large private equity firms charging performance fees above the norm. Instead of the usual “2 and 20,” these firms are charging LPs 30 percent carried interest, the story said. Funds offering this “super carry” include Carlyle GroupVista Equity Partners and Bain Capital in the U.S., while EQTEurazeo and Altor in Europe are part of the trend, the FT said.

This isn’t the first time we’ve seen “super carry.” The trend hit the industry during the last gold rush leading up to the financial crash of 2008, and then it went away when funds struggled to raise money, the FT said. PE firms are able to dictate such terms because they’re able to raise funds at the fastest pace since the crash. It only takes about 12 months to raise a fund compared to 20 months in 2010, the FT said, citing Preqin. Bain’s second life sciences fund is giving LPs the option to pay 1 percent management fee in exchange for 30 percent carried interest, the story said. Bain is ditching the hurdle rate for this fund, the story said.

Hubsters, have you seen or experienced this “super carry” trend? Are you okay with this? If so, why? If not, why not? Is this another sign of the bubble? Email me

Funds: The time to liquidity for private equity funds is particularly short and back to levels not seen since 2011, according to a report from eFront. The time-to-liquidity dropped to an average of 2.7 years in 2018, which is close to the 2.5 years threshold below which it’s difficult for fund managers to deploy their skillsets to create value in portfolio companies, eFront said.

Serena Williams launched her VC firm, Serena Ventures, in 2014, Marina Temkin reports. The firm has invested in 30 companies, according to press reports.

This just in. North Castle Partners has closed its most recent fund at its $400 million hard cap. North Castle needed less than five months to raise the fund. The firm also closed the sale of Jenny Craig to H.I.G. See our brief here.

A big name may be joining the ranks of independent sponsors. The new firm from Alex Navab, a former KKR senior exec, may function on a deal-by-deal basis in the absence of a formal private equity fund, Chris is reporting. Navab’s debut pool could come to market in coming months and will likely target $3 billion. Read Chris’s story here.


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