Spanish fund of funds manager Altamar Private Equity will not charge management fees to limited partners in its recently closed secondaries fund until money is committed to deals, the firm has said. Furthermore, any capital that has not been put to work by the end of the 18-month investment period will be returned to LPs.
In a traditional private equity fee structure, management fees of 2 percent would be charged on the LP’s fund commitment throughout the fund’s life. Under the arrangement for Altamar’s secondaries annex, fees will only be payable as and when secondaries deals have been executed. Carry on the fund will be 10 percent – rather than Altamar’s typical 5 percent – with a 5 percent hurdle rate.
The arrangements have been made in recognition of the fact that in the competitive and uncertain secondaries market, there is no guarantee that deals will be sourced and executed within the timeframe, Inés Andrade, managing director at Altamar told PEO.
“The investment opportunity is between a year and two years, so why should LPs commit to a five-year investment period?,” said Andrade, adding that the firm was currently working on a healthy pipeline of potential deals.
The €65 million Altamar Secondary Opportunities IV is the first fund the firm has raised to target investments only in secondaries.
The fund’s predecessor, the €420 million Altamar Buyout Global, is mandated to invest up to 20 percent of its capital – around €84 million – in secondaries deals. As the window for secondaries deals has opened, the firm decided to supplement this €84 million by raising an annex vehicle, to coincide with the remaining 18 months of Altamar Buyout Global’s investment period.
LP’s in the annex vehicle are exclusively Spanish institutions and, apart from one, are existing Altamar LPs.
The fund will seek to acquire stakes primarily in funds managed by firms with which Altamar has existing relationships.