Home Waterfalls
Waterfalls
Clawback risks surge as private equity funds grapple with prolonged holding periods and macroeconomic headwinds, pushing GPs to rethink their waterfall strategies.
A CSC survey found that many LPs are pushing back on less transparent waterfall provisions.
There could be almost $80bn of NAV in funds where carry is owed back to LPs that have backed US vehicles, according to research from Upwelling Capital Group.
Provisions that mitigate clawback risk are becoming a more important part of the LP-GP conversation, says Tim Eberle, managing director and head of waterfall services at the Citco group of companies (Citco)
Tim Eberle, managing director of Citco Fund Services (USA), outlines the firm’s recommended steps to reduce heightened clawback risk.
The tech companies’ partnership will give clients automated carry and waterfall calculations, as well as instant access to relevant data from fund documents for audits and more.
Provider aims to make calculating overall carry faster and less error prone, and will soon offer automated employee-specific carry calculations.
A long-standing aversion toward using technology and automated processes to calculate carry and waterfalls is slowly dissipating, but the private funds industry has some way to go before adoption takes hold across the board.
Petra Funds arrives as the weight of back-office burdens is set to grow. Regulators are starting to roll out proposals aimed at making private markets more transparent and leveling the playing field.
Whether it’s tenders, intervals, evergreens or hybrids, the private funds industry is seeing a re-emergence of novel fund structures. We spoke to managers and service providers trying to tap a growing base of investors.