Sun Capital Offers To Cut Fund Size

We first reported in August that Sun Capital Partners investors were pushing for a fund size cut, and now the Boca Raton-based firm has acceded.

In a letter dated yesterday (and obtained by peHUB), Sun is offering to reduce its $6 billion fifth fund by $1 billion, or down to $5 billion. If not all LPs cut their stakes by 16.7% — such as Sun employees who might consider personal reductions to be bad form — then other LPs can reduce by up to around 33 percent.

Sun is keeping its 2% management fee intact, and there is no mention of altering the structure whereby the management fee is rolled over into the GP contribution (a bizarre structure that leaves Sun with very little operational capital when transaction fees aren’t rolling in). Also no word on what will happen to previously paid management fees, which now would have to be paid back (or perhaps carved out of future fees).

The fund size cut is expected to be made effective on December 31.

(kudos to Pete Lattman at WSJ, for first breaking the story this morning)