Alignment Of Interest

As an increasing number of sponsors turn to secondaries processes, doubts are being raised about the market’s building blocks. Just how aligned is the secondaries market today?

Conflicts of interest can arise within the LP base as LPACs act in their own interest, not in the interest of the fund.

For the GP, internal alignment is another opportunity to manage team dynamics. Third parties will want to see that the right people participate in the economics.

When dealing with waterfalls, there are tools that can be used to create economic alignment from the outset.

An incentivised management team is crucial to ensuring ultimate success in GP-led secondaries deals.

Finding the pricing sweet spot to satisfy sponsors, buyers and LPs is tougher than ever in today’s market.

Some sponsors are still able to drive aggressive terms in GP-led deals, though perhaps not for much longer.

Alternatives managers going public remains an issue some LPs can’t get their heads around.

Funds set up to allow sponsors to hold assets for longer typically must satisfy both an IRR and MOIC hurdle, research from law firm Paul Hastings has found.

PEI catches up with Kosmo Kalliarekos, managing director and 14-year veteran of Baring Private Equity Asia, to discuss alignment, IPOs and regulation ahead of its €6.8bn acquisition by EQT.