The so-called two and 20 model, so
often considered to be the standard fee charging model for
private equity firms is dying, as the industry consolidates and
favours mega funds. In the future, it is expected that there
will be even greater fee flexibility to mitigate risk and
Oliver Ontiveros, partner at Warwick
Capital, said it is a matter of how competitive private equity
houses want to be. "Investors don’t look
favourably on firms that focus on operational fees as a profit
centre and pension funds are a lot more demanding than in past
years," he said.
Consolidation in the private equity sector has been ongoing.
L Capital and Catterton’s merger in 2016 set off a
period of consolidation in the sector that is expected to
continue into this year and in the last 12 months, Eurazeo
merged with Idinvest and Apax France merged with EPF Partners.