The hottest accessory this season? Investor capital! Overlooked for so long as just part of the scenery, this increasingly sought-after and versatile item can really keep a GP from ending up as yesterday’s news.
Although we continue to look for hard data to support this, the market is filled with anecdotal evidence that LPs are making their capital commitments rather scarce, or at least threatening to do so.
A number of mega-fundraisings have apparently stalled or been vastly downsized. This has put GPs on a charm offensive. For example, as I detail in the September issue of Private Equity International magazine, many GPs are offering co-investment slices of prior funds to any LP who slaps down cash for the new fund. In other words, buy now and get an earlier vintage at a reduced rate.
In some cases, more extreme term concessions are being offered. The Carlyle Group, the fundraising machine par excellence, has suffered a bruise of late in the form of Carlyle Capital, the now-defunct credit vehicle traded briefly on the Euronext. In order to make sure the investors in this relatively small vehicle get the point that Carlyle really wants them to remain customers, Carlyle is offering them fee-free access to its other funds, according to a Carlyle LP source.
Carlyle declined to comment and did not confirm or deny this information.
If LPs collectively are looking for a good time to smash up any hated terms in the partnership, now is the season.