Array of Bespoke Fees and Expense Possibilities Offered by Single Investor Funds
Array of Bespoke Fees and Expense Possibilities Offered by Single Investor Funds
Todd Boudreau spoke to Private Equity Law Report for an article covering single investor funds (SIFs), including unique fee and expense dynamics currently being deployed in the SIF market, as well as guidance for how sponsors can allocate and disclose expenses to avoid potential risks.
Notwithstanding the foregoing about minimal changes to carry waterfalls, SIF LPs are more likely to negotiate for certain fee triggers in their fund documents based on GPs' investing practices. "It's a problem if a SIF LP feels like the manager is just taking out management fees and not investing the capital as it promised," Todd said.
Todd added that many SIFs include more benign provisions in the SIF fund documents, such as "best efforts" standards and certain pacing requirements for how and when the LP's capital is deployed. "It's more of a discussion between the parties than a hardline stance where the LP will close down the SIF if capital is deployed slowly because LPs do not want to force the GP to make bad investments just to ensure capital is promptly deployed."
Read the full article.
Practices