Private equity managers are cutting fees and sharing more revenue with investors as they seek to raise cash for new funds, according to researcher Preqin.
Buyout pools currently raising $1 billion or more are asking for an average management fee of 1.6%, down from a peak of 1.9% in 2008, according to a Preqin study released Monday.
Pension funds, endowments and sovereign funds are pushing for a greater share of deal-related fees. About 81% of investors in the Preqin study said the terms have become more favorable in the past year.
“Fund terms and conditions look set to remain an important area of focus for investors in the year ahead,” Helen Kenyon, Preqin’s manager for investor data, said in a statement.
Investors also told Preqin that private-equity managers are increasingly sharing more of their deal fees, or money paid to them during transactions. Sixty-four percent of respondents said they were dissatisfied with investment management fees.