Brackendale works with its fund manager clients to help them market themselves and their policies in the best possible light to LP investors, while IQ-EQ focuses on helping fund managers and investors commit capital in a sustainable and compliant manner. Together, we wanted to explore LP perspectives on ESG and the viability of fund manager compensation levels in a changing macro-economic climate.
LPs surveyed hail from across Europe, North America, and Asia. They comprise a mix of pension funds, insurance companies, family offices, and fund-of-funds from our extensive contact network.
Questions in our survey were designed to explore LP reactions to the costs inherent in the private equity fund investment process, and whether current GP compensation levels are acceptable in a higher interest rate environment.
A resounding majority of LPs surveyed thought that GP compensation should be linked to ESG-related incentives. LPs largely felt they held very little influence in fundraising negotiations. While a third of LPs questioned the relevance of the 2:20 private equity fee model, a fund’s track record and team were deemed more important than fees.