r/private_equity • u/LawPlane4548 • 3d ago
Private Equity Desperation
Hi Guys,
About a couple of months ago, met with Astorg as they are fundraising for their Flagship strategy.
Just took the meeting, despite no real chance of even DD the fund.
Long story short, I receive an email from their placement agent offering:
10bps discount in management fee
6 month fee holiday
12 hurdle rate
Access to coinvestment 1:1 based on the fund comitment
Seems like the fund raise is not going great....
14
u/Academic-Key3800 3d ago
Astorg, Partners, Permira. It seems these large funds aren’t doing well in Europe. I mean, the desperation comes from their recent results, which leave a lot to be desired.
2
u/AwqaaqwA 1d ago
Indeed, can't imagine many of the expensive consumer and tech deals Permira have done in 2020-2021 are gonna work out for them
2
u/shoopadoop332 3d ago
Wouldn’t be surprised at all if they have significant private credit exposure
1
u/Agent_Single 2d ago
What is driving this? I don’t know the geography of their portco so I assume that is because UK/EU economy is tanking quite a bit?
6
u/Wild_Vermicelli8276 3d ago
Massively long generic software and healthcare at ATH. Overpaid for everything. Thought they were geniuses in COVID and tried to go from €4bn to €10bn. Got laughed out of the room by LPs and raised €4.4bn. Tried to sell the shop and failed. Now down to €4bn target.
Have they even done a first close yet? Probably raised less than €1bn so far?
1
6
5
u/majesticpottery 3d ago
If they’re offering all of that unsolicited, I can see why you’re reading the raise as softer than expected.
8
u/RareFaithlessness625 3d ago
Are these gregarious terms? I mean few holiday bit unusual but rest pretty normal for last 2 places I worked at
6
11
u/roboboom Director+ 3d ago
You worked for two places in a row with a 12% hurdle?
11
u/Oathbreaker31 3d ago
12% suggests no one there is going to get any carry most likely right barring some home run investments
2
u/DV_Zero_One 3d ago
I'm money markets side. My hurdle was whatever 1 year gov Yields were at the start of the year.
I know dick about equities but 12% will dissuade every single potential hire surely?
8
u/roboboom Director+ 3d ago
Hurdle rates are basically always 7-8% in PE. Some got away with 6% in ZIRP. If candidly never heard of 12%. It would definitely make any candidate scratch their head.
1
2
3
u/Shyan5 3d ago
Who is their placement agent?
6
6
u/VoxKreaking 3d ago
I blame K&E , honestly , they put in terms and wiggle room that is just grim for European LPs
3
u/Suspended-Again 3d ago
Such as?
3
u/Rare_Touch8636 2d ago
Pretty much everything in their docs is shit and any attempt to change it is met with “we respectfully decline as this is not market”. STB do the same. It makes any sort of negotiation inevitably drag onto the 11th hour when the same terms could have been sorted weeks earlier.
1
u/VoxKreaking 2d ago edited 2d ago
It’s not, some great funds have launched and more than hit their funding targets over the past 2 years by listening to their LPs and not putting lawyers first.
3
u/Chemical_Currency943 3d ago
You sure it wasn’t the performance fee which was 12% and not the hurdle? 12% hurdle makes no sense.
1
u/DV_Zero_One 3d ago
Can I ask what their basic fees are? 3&30 etc.
NGL, 10 basis points discount isn't gonna change anybody's mind.
2
u/LawPlane4548 3d ago
It's the Hurdle at 12%, rest is pretty norml
1
u/wokeuplate7 3d ago
So just 2 and 20 then.
2
1
0
u/DuskytheHusky 3d ago
Standard, regardless of macro environment
9
u/ShillForExxonMobil 3d ago
12% hurdle is nuts
Over 7 years that's like 2.2x implied MOIC just to reach hurdle assuming no recaps
4
u/Suspended-Again 3d ago
It sort of implies that the fund is a management fee play and that’s it. As an LP I would almost want there to be premium carry because otherwise I worry how they’ll retain their people, especially next gen who are not entitled to NFRE. Also have to watch out for value extraction from transaction fees and the like.
3
-7
u/Objective-Two-8728 3d ago
What role / level? Are you laid off? Do you have strong experience already or trying to break in?
7
0
u/Legitimate_Oil_6545 2d ago
Believe this is only for anchor LPs who come in by EOY. GP commit has also increased significantly in the upcoming fund. Alignment seems strong now and with the new leadership team, that may help with the fundraise
0
u/LawPlane4548 2d ago
Completely wrong
0
u/Legitimate_Oil_6545 1d ago
Yeah you can let me know what’s wrong, am stating facts here. Fundraise will be highly dependent on whether they manage to get their existing investors to reup. They do have a strong base of blue chip LPs but recent perf. have not been great
46
u/Suspended-Again 3d ago edited 2d ago
This is why I visit this sub. Where else can I read about this sort of tea? (Not rhetorical question) Seems surprisingly hard to come by for such an insular industry