Aggie Partners is raising their first fund, Aggie Partners Fund I, with $200M in committed ital, annual management fees of 1.75 percent, carried interest of 20 percent, and a carried erest basis of committed capital. The three individuals on the Aggie team have previously naged the captive VC portfolio for the Presidio family. During the 10 years of naging the Presidio's VC portfolio, the partners did not charge management fees or ried interest, and they achieved an unknown GVM equal to K. a. For any given K, solve for the carried interest, value multiple, and GP%. b. How large must K be for the value multiple to be greater than 3? C. How would your answer to parts (a) and (b) change if the carry basis were equal to investment capital?
Aggie Partners is raising their first fund, Aggie Partners Fund I, with $200M in committed ital, annual management fees of 1.75 percent, carried interest of 20 percent, and a carried erest basis of committed capital. The three individuals on the Aggie team have previously naged the captive VC portfolio for the Presidio family. During the 10 years of naging the Presidio's VC portfolio, the partners did not charge management fees or ried interest, and they achieved an unknown GVM equal to K. a. For any given K, solve for the carried interest, value multiple, and GP%. b. How large must K be for the value multiple to be greater than 3? C. How would your answer to parts (a) and (b) change if the carry basis were equal to investment capital?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:2. Aggie Partners is raising their first fund, Aggie Partners Fund I, with $200M in committed
capital, annual management fees of 1.75 percent, carried interest of 20 percent, and a carried
interest basis of committed capital. The three individuals on the Aggie team have previously
managed the captive VC portfolio for the Presidio family. During the 10 years of
managing the Presidio's VC portfolio, the partners did not charge management fees or
carried interest, and they achieved an unknown GVM equal to K.
a. For any given K, solve for the carried interest, value multiple, and GP%.
b. How large must K be for the value multiple to be greater than 3?
How would your answer to parts (a) and (b) change if the carry basis were equal to
investment capital?
с.
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