New Jersey State Division of Investment decided against committing to KPS Capital’s latest funds over disagreements on fund terms, according to documents from the Investment Council’s Nov. 20 meeting.
“After extensive negotiations, the division and the funds were unable to reach agreement on the terms of the legal documents, and the division did not participate in the funds’ October closing,” the documents said.
New Jersey and KPS both declined to comment further.
KPS Special Situations Fund V and KPS Mid-Cap Fund closed in October after only four weeks of fundraising, as Buyouts reported. KPS said there was $15 billion of demand in the fifth flagship fund, which closed at $6.12 billion. The Mid-Cap fund closed at $1 billion, well over its $750 million target.
KPS’ funds have a premium 30 percent carry, plus a lower 1.25 percent management fee. Founder Michael Psaros defended the higher carry to sister publication Private Equity International in a recent interview, saying “the market has spoken.”
“The two decades of consistent out-performance are compelling enough for our investors to want to invest in our fund,” Psaros told PEI.
At the Nov. 20 meeting, the council did give the green light to proceed with a $100 million commitment to MBK Partners’ fifth fund.
The South Korea-based manager has $15.7 billion in AUM. Fund V will focus on management-led buyouts in Korea, Japan and Greater China. PEI recently examined the performance of MBK’s previous funds.
As of Sept. 30, the Division of Investment was managing $78.46 billion in assets.
Action Item: Read New Jersey State Investment Council’s most recent investment report here.