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Array of Bespoke Fee and Expense Possibilities Offered by Single Investor Funds (Part Two of Two), Private Equity Law Report

January 18, 2022

In the second article of a two-part Private Equity Law Report series on single investor funds (SIFs), partner Christopher Dlutowski discussed the unique fee and expense dynamics used in the SIF market, as well as guidance on how sponsors can allocate and disclose expenses to avoid potential risks. Chris told the publication there are a number of organizational expenses associated with forming and negotiating a SIF vehicle, and a variety of approaches as to how those are allocated between SIF investors and fund managers. 

“Sometimes, investors negotiate a cap on the amount of expenses the fund will bear, along with a very narrow scope and nature of what the covered expenses include[s],” he said, adding that reverse caps can also apply, where managers bear a certain portion of the expenses and the fund is responsible for any excess amounts. “Ultimately, those are real commercial decisions in terms of what managers are willing to bear versus what investors are willing to bear; what their starting points are; and their respective leverage given the dynamics of that particular manager, investor, product and strategy.”

Read the full Private Equity Law Report article >>