Giving something back


The London-based buyout firm headed by Damon Buffini (pictured) threw capital -constrained limited partners a lifeline last year when it allowed investors to cut their commitments in its fourth fund by 40 percent.


US private equity firm TPG soon followed Permira by giving its LPs in TPG Partners VI the option to reduce their commitments by up to 10 percent, and also to cap at 60 percent their original commitments to the firm's fourth buyout fund. Management fee relief has also become a big issue for investors, with TPG reducing its management fees by 10 percent.

3) HgCapital

The London-based mid-market investor was ahead of the trend last autumn when it decided to cut the management fee for its latest fund to 1.75 percent. While appeasing LPs, the move was also seen as a way to possibly make more money through carried interest.

4)Kohlberg Kravis Roberts

While Kohlberg Kravis Roberts has not been known for below-market fees, the firm took a different path for its debut infrastructure fund. In order to draw investors, the firm charged investors a 1 percent management fee and 10 percent carry rather than the usual 2-and-20 structure.

5) Terra Firma

Faced with the prospect of three defaulting limited partners, UK buyout house Terra Firma, run by Guy Hands (pictured), took the unusual step of buying cash-strapped LPs out of its 2007 fund. The move helped head off a default and potential shrinkage of the fund size.

6)The Carlyle Group

With a number of mega-fundraisings already stalling by September of last year, many GPs began offering co-investment slices of prior funds for LPs who put down cash for a new fund. For instance, the Carlyle Group offered fee-free access to other funds for investors in its now-defunct Carlyle Capital, which was briefly traded on Euronext.

7)Apollo Global Management

After the $10.6 billion merger between chemical company Huntsman and Apollo Global Management portfolio company Hexion collapsed in 2008, Apollo agreed to pick up $200 million in damages even though it was not obligated to do so under fund documentation.

8)Quadrangle Group

Following the recent kick-back scandal in New York, Quadrangle Group agreed to pay all legal expenses for any investigations in connection with the use of placement agents. The firm also gave LPs the right to dissolve the investment period of its $2 billion second fund and pledged to call an LP advisory committee meeting “no less than quarterly to keep it apprised of any developments at the firm”.

9)Sevin Rosen Funds

In June 2008, US venture capital firm Sevin Rosen Funds asked investors to extend by three years the life of its eighth fund and by two years the life of its seventh fund due to the weak IPO market. In return, the general partner agreed to waive any additional management fees and disperse over a longer time period the remaining management fees.

10) CapGen

However, not every firm has been so accommodating when it comes to their LPs. New York-based private equity firm CapGen in March took the rare step of filing lawsuits against two limited partners for allegedly defaulting on capital calls.