KPS Does Right By Its Non-Investor
A couple months ago, we reported that turnaround firm KPS Capital Partners had raised $800 million in “top-off” capital for a $1.2 billion third fund that originally closed in 2007. The new effort was oversubscribed, even though KPS retained its 2007-vintage 25% carried interest structure and 50/50 fee split. Why would LPs pile back into a fund with such gaudy terms? Doesn’t this contradict what I wrote yesterday about Greylock’s success partially deriving from generous LP treatment? I would have thought so, until reading an item in this morning’s Private Equity Insider (which peHUB has since confirmed independently): Alameda County Employees (not an existing Fund III investor) approved up to $30 million in commitments for the top-off fund, but ultimately got shut out because of existing LP demand. Alameda was displeased, and asked KPS to reimburse the pension system for legal costs related to
