I’ve been doing some diligence on an interesting private fund that invests in private stakes of alternative asset managers. In that research I was shocked to find out that GP stakes managers have securitized and sold interests in management fee streams of private funds in the recent-ish past:
It doesn’t seem odd in retrospect as I personally believe and invest behind the idea that PE shops’ fee streams are fundamentally under-appreciated by the broader market but I hadn’t thought of this concept on my own.
It also somewhat aligns with the idea that PE firms noticed that the public equity market likes management fee streams by virtue of the high multiples it places on it, in contrast to the fee streams associated with carry. Compensation of PE professionals (on the opportunistic side of the spectrum where carry is substantial) is now moving towards heavier weighting of carry vs fee streams as the employees value the carry more than the fee streams (opposite to the public market).