Private Equity’s Slowdown Hands More Control to Limited Partners

Investors in private equity funds are gaining more sway over the general partners that manage the vehicles as the industry’s payouts continue to lag the historical average, according to a new report.

Limited partners now expect the managers of private equity firms to put up more of their own capital when launching new funds, and they’re demanding more concessions, such as opportunities to make zero-fee co-investments, the report by asset manager Orix shows. Private equity firms have also had to cut their management fees to levels never before seen as they try to keep their backers happy.

The shifting balance ...