Justin Kliger and Marc Biamonte Discuss Larger Fund Commitments from GPs

Employees and partners at private equity firms are unexpectedly making bigger investment commitments to their funds. October data from MJ Hudson shows that 80 percent of private equity and venture capital firms committed more than 2 percent to funds raised in 2021. Over the three prior years, 75 percent had done the same. 

In an Institutional Investor article, asset management partners Justin Kliger and Marc Biamonte share insight into what might be causing this increase. “In my experience, a lot of the interest comes from the employees themselves,” said Marc. “It’s a great opportunity for them. When they have high conviction in the firm at which they work, then they can get the opportunity to put that money to work in a favorable fee arrangement.” 

Regardless of the structure itself, Justin noted that alternatives firms need to consider whether it makes sense to bring in junior employees, who may be more mobile earlier in their careers.  “They sometimes look for more flexibility to handle employees who are coming and going over the course of the life of the fund,” Justin said. “It really comes down to the alignment of interests,” Marc said. And that’s not just with employees — it’s with limited partners, too.