TA Associates cuts carried interest

Boston-based private equity firm TA Associates has cut the carried interest on its latest fund from 25% to 20%, PE Week has learned.

The move has drawn applause from limited partners, including those whose investment committees might have balked at paying premium carry in this economic environment.

The fund in question is TA XI, which has soft commitments for most—if not all—of its $3.5 billion target.

TA traditionally raised two sets of private equity funds, with one for U.S. investors and one for foreign investors. The separation traces its roots back to the early 1980s, when tax laws made it difficult for firms to raise funds that included both sets of LPs. What resulted was a pair of vehicles that co-invest, but which are raised on alternate cycles. In other words, TA X (for U.S. LPs) closed in 2006 with $3.5 billion. TA Atlantic & Pacific (non-U.S.) closed in 2007 with $1.75 billion.

According to the California Public Employees’ Retirement System, TA X had an IRR of negative 13.1% as of Sept. 30. That’s a giant drop from just two quarters earlier, when the fund had posted a positive IRR of 21.6 percent.

TA Associates did not respond to requests for comment. —Dan Primack