{ "media_type": "text", "post_content": "How frequently is a PE investor realizing a full fund return? I get that it’s hard with timing. But let’s say it’s a $750m fund. Returns 3x MOIC. $2,250M. 20% is $450M. You’re an MD with 2% of the carry pool earning $9M. How often is that $9M paying out? Would depend on a typical rate of capital deployment and fundraising.. let’s say you raise a fund every other year. Average investment is 3-4 years. If you invested the whole fund in 1-2 years. And do this with over 10 years, that’s $45M?", "post_id": "60aa0ef8d7134e0024727809", "reply_count": 5, "vote_count": 2, "bowl_id": "5b7c3919448e9300186d3deb", "bowl_name": "Private Equity and the Buy Side" }

How frequently is a PE investor realizing a full fund return? I get that it’s hard with timing. But let’s say it’s a $750m fund. Returns 3x MOIC. $2,250M. 20% is $450M. You’re an MD with 2% of the carry pool earning $9M. How often is that $9M paying out? Would depend on a typical rate of capital deployment and fundraising.. let’s say you raise a fund every other year. Average investment is 3-4 years. If you invested the whole fund in 1-2 years. And do this with over 10 years, that’s $45M?

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I mean I think you answer your own question. Can always build out a model for yourself to answer the question. Also, the carry pool in your example is actually $300M...you only get 20% of the profit (over $750M in this example), not 20% of cash disbursements

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Market terms include a catch up provision, so LP gets the first 8%, GP gets the next 2%, and then its an 80/20 split of every dollar after that. A 3.0x MOIC outcome on a fund will easily be past the catch-up provision, so it’s not even worth considering

But it would take more than 10 years to pay out. There would be a few more there at the end

You are sort of answering your own question with the inputs provided. The answer depends primarily on the return of the fund and the % of carry you are eligible to. MDs/Partners can get ~70% of the pie, Principals/VPs can get ~25% and the rest get the rest

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