Simon Faure, director, M&G investment, has invested in firms that have sold a slice of their franchise, but he does consider GP ownership when looking at commitments. “If some of the economics are going out of the house, we want 99 percent of the economics to be going to the individuals who are deploying the capital, because that’s who are paying for results. We want to maximize their incentives and the firepower of the GP to hire the best people.
“And to the extent that it generates liquidity for the GP, does that make them feel like they have less at risk? That the carry doesn’t mean as much?
“I wouldn’t say we have a hard and fast rule about what is an acceptable level or not. Clearly we want the people running the firm and making the investments to own the majority of the economics. Generating liquidity at large firms can be an important tool in retention, succession and funding internal investment.”