I know this platform is for CFA Exams preparation and courses.
But, I have an issue and I had to open my Level 2 book to understand the fund structures of private equity funds.
I need to make a financial model including a first loss investor assumption as well as a IRR Hurdle Waterfall for a private equity fund and I’ve made some researches online but couldn’t’t find a convenient template. So, I came here to find some help if someone is a private equity fund manager or funds of funds analyst who can help me. I’ll really appreciate your help.
First loss is kind of clause that specifically incentives fund manager not to incur losses kind of tool that still reward the intellectual capital of the fund manager and allow for business growth and offer the investor symmetry
In Model
treat as CFL outflow from the fund,
IRR hurdle rate waterfall you set a hurdle that goes to LP’s as the first distribution, than a difference (exit and hurdle rate distribution) goes to second distribution waterfall i.e 20/80 GP/LP split
Investments * (1+hurdle rate)^n
It is not a big deal a few complicate that though…
I f you pop me up with private email I might be able to send you a simple template, better is to build it yourself