GP, who doesn't want to lie flat this year, faces fundraising issues when they open their eyes.
Someone has summarized that "fundraising is essentially a matter of preparing for long-term battles in a constantly declining market.
The topic of 'changing money' has become increasingly heavy, but although it is difficult, it still needs to be kept on the road.
Recently, there have been news in the market about institutions actively refunding LP funds and shrinking their scale, while at the same time, the topic of "management fees" has also been brought to the forefront.
In order to raise funds, GP has started to reduce management fees.
GP is starting to lower management fees
This scene is on the table, and we need to start with Blackstone recently.
In the first half of 2023, the fiercely competitive private equity fundraising environment has put pressure on many GPs, and many US dollar PE giants have also been impacted, with Blackstone being one of them.
It is reported that BREIT, a real estate investment fund under Blackstone Group, suffered a redemption crisis last year, and the release of BXPE, a private equity strategy fund under Blackstone Group, was postponed for several months. Currently, Blackstone Group plans to charge no fees for the first six months for this fund and reduce the management fee to an uncommon 1.25%. The carryover of the threshold rate has also been reduced from 20% to 12.5%.
The news of Blackstone lowering management fees has sparked heated discussions in the industry. As a global PE giant, Blackstone was able to support half of its revenue with management fees. However, unlike in the past, in the face of fundraising difficulties, Blackstone has had to bow and reduce management fees.
Raising funds is difficult year by year, especially this year. In the comprehensively difficult primary market, GP has started to come up with unique strategies to survive, and actively or passively reducing management fees in order to survive is one of them.
Recently, more and more GPs complain about and share the status quo of the industry. The current problems encountered in investment and fundraising can be seen everywhere, and "management fees" has become one of the key topics. In order to raise funds, GPs have started to actively or passively mention management fees.
When an institution raises a RMB fund and there is still a 10% gap, they are required to give up management fees when communicating with state-owned assets in a certain location; The founding partner of a certain institution led a team to prepare institutional materials and recommended projects that LP was interested in. The final response was that the project was good and we could talk about the next investment matters, but let's not talk about management fees and Carry.
Some institutions, in order to better obtain fundraising opportunities, will proactively issue clauses to the LP waiving management fees and not limit the investment scale of the LP, with the aim of attracting the LP to endorse and finalize other LPs.
Various factors such as market environment, policy regulation, and personal performance have made LP investments more cautious.
A certain institution helplessly said, "As long as we mention the matter of funding with LP this year, LP will talk about the overall environment of this year, and even some will share articles with GP about the bad environment
Recently, many LPs have also expressed concerns about GP performance to us.