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Princess Private Equity enters new management agreement with Partners

By Josh White

Date: Tuesday 28 Jul 2020

Princess Private Equity enters new management agreement with Partners

(Sharecast News) - Princess Private Equity has entered into a new investment management agreement with Partners Group, it announced on Tuesday, with effect from 1 July.
The London-listed firm said the agreement replaced the previous agreement with Princess Management - a wholly-owned subsidiary of Partners Group - under which Princess Management had engaged Partners Group to provide investment services under a separate investment advisory agreement.

It said the key terms of the new agreement were that, in consideration of the investment services provided, the company would pay a management fee equal to 0.375% per quarter of the private equity asset value, being the higher of its net asset value and the value of its assets, less any temporary investments made for the purposes of liquidity management, plus the amount of unfunded commitments.

"In order to achieve its investment objective, the company may make commitments to investment programmes or other pooling vehicles managed by the investment manager or its affiliates," the board explained in its statement.

"For the purposes of calculating the value of the company's assets and unfunded commitments, the company's pro rata share of investments and commitments made by such pooling vehicles is included, but the company's commitments to invest in such pooling vehicles are excluded."

The firm said the rate of 0.375% per quarter remained unchanged from the original investment management agreement.

However, it said the definition of private equity asset value excluded two items which were included under the original agreement, thus reducing the management fees that would have been payable under that deal.

Those items were unfunded commitments in respect of primary and secondary investments, and that for the purposes of liquidity management, the company could invest in the open-ended Partners Group Global Senior Loan Master Fund SICAV managed by the investment manager.

The board said that under the new agreement, investments in the Partners Group Global Senior Loan Master Fund were excluded from the definition of private equity asset value, and instead, they incurred a lower effective management fee of 0.6% per annum.

Princess said the incentive fees remained unchanged compared to the original agreement, explaining that for direct and secondary investments, the advisor would receive 15% and 10% respectively, whether or not they were made through a pooling vehicle, subject to an 8% preferred return for the company.

The board said that no second layer of management or incentive fees would be payable for any commitments to pooling vehicles managed by the investment manager or its affiliates.

It said the agreement would remain in effect for an initial term of two calendar years, and then could be terminated by either party at the end of the initial term, and each calendar year thereafter, on two years' prior written notice.

The existing term of the original agreement automatically renewed every 10 years, with a three-year notice period.

"Following a review by the company's management engagement committee, the board is pleased to have agreed a new investment management agreement on improved terms, which it believes is aligned with the interests of shareholders," said chairman Richard Battey.

"Partners Group, the investment manager, is a well-established investor in private equity with a global team of over 100 direct private equity professionals including local investment teams, in-house operators and industry value creation specialists who bring significant sector experience and help to create value in portfolio companies.

"An investment in the company enables shareholders to invest alongside the investment manager's institutional clients and to access a global portfolio of leading private companies that would otherwise not be accessible to investors in public equity markets."

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