Boston-based private equity firm TA Associates has decided to cut the carried interest on its latest fund from 25% to 20%, peHUB has learned. The move has drawn applause from limited partners, including those whose investment committees might have balked at paying premium carry in this economic environment.
The fund in question here is TA XI, which we’re told has soft circles for most — if not all — of its $3.5 billion target.
TA traditionally raised two sets of private equity funds: One for U.S. investors and one for foreign investors. The dichotomy traces its roots back to the early 1980s, when tax laws made it difficult for firms to raise funds that included both sets of LPs. What resulted was a pair of vehicles that co-invest, but which get raised on alternate cycles. In other words, TA X (for U.S. LPs) closed in 2006 with $3.5 billion. TA Atlantic & Pacific (non-U.S.) closed in 2007 with $1.75 billion.
According to CalPERS, TA X had an IRR of -13.1% as of Sept. 30, 2008. That’s a giant drop from just two quarters earlier, when the fund had posted a positive IRR of 21.6 percent (maybe they became FAS157-compliant a bit early).
TA Associates did not return requests for comment, but we’ll update this post if we here from them…