Charterhouse Said to Face Investor Pressure for Fee CutKiel Porter
Charterhouse Capital Partners LLP, manager of a 4 billion-euro ($5.4 billion) private-equity fund, is under pressure to cut the fees it charges as it seeks more time to spend the fund it raised four years ago, two people with knowledge of the matter said.
The firm plans to ask investors next month to extend the fund’s investment period, which expires in March, by a further 12 months, said the people who asked not to be identified because they weren’t authorized to speak publicly. Charterhouse has spent about 2.5 billion euros of it so far, the people said.
Private-equity firms typically pool money from pension plans and endowments for a 10-year period with companies bought within the first five years and sold over the second five. They get to keep 20 percent of the profit from investments and, in Charterhouse’s case, charge investors an annual management fee equivalent to 1.5 percent of the fund, or 60 million euros.
In informal talks with Charterhouse, a group of the fund’s major investors has pressed the firm to base the management fee on the amount the firm has spent instead of the total value of the fund, the people said. That would cut Charterhouse’s fee by about 12.5 million euros.
Gary Sunderland, a spokesman for Charterhouse based in London, declined to comment. Charterhouse Capital Partners IX had a net internal rate of return of 8.3 percent as of June 30, according to figures published by the Florida Retirement System, an investor.