The limited partners of
According to a source with knowledge of the situation, however, the re-instatement came with several GP concessions, including a deferral of the carried interest; an offset of 100 percent of fees against management fees; termination of the investment period if any of the four remaining founders depart; consultation with the LP advisory committee before investing in a new company; and a $150 million cap on follow-on investments after the investment period ends.
The source added: “Those that had a negative perspective obviously viewed Schloss’s departure to be material and key. Sub-par investment performance might have also played a factor.” According to the
Senior Managing Director and co-founder Mike Ranger told Buyouts that more than the 57.5 percent of the LPs needed to approve the re-instatement voted to do so. Thus, investment will continue through the end of 2010. Also, a new key-person provision was drafted to include the four remaining founders, Ranger and Senior Managing Directors Ari Benacerraf, Andrew Rush and David Wittels. Ranger did not respond to questions about other concessions.
Schloss’s departure triggered a key-person provision of the $1.8 billion Diamond Castle Partners IV LP, which closed in 2006 and is now more than 70 percent invested. The other event that could have triggered the original provision was the exit of both Ranger and Rush.
Backers of the fund include the