GLOBAL - LPs 'will find a way out'

"There is a need for true alignment of interests when it comes to fees and returns. Fund investment officers will pay fair fees, but they will scrutinise them," he continued, saying corporate jets and large bonuses were a thing of the past. He further predicted LPs seeking two-tiered fund structures, where fees decrease after the initial investment period. He also forecasts LPs looking for 'emergency exits' - allowing them to bow out of a fund at cost owing to 'unforeseen circumstances' rather than face draconian measures.

He cited Calpers as an example of a US pension fund proactively assessing today's market. The Californian pension fund held a shareholders' meeting yesterday to discuss the alignment of interests, transparency and corporate governance. "These are the three areas where Calpers sees significant changes in terms for the future," Stone commented.

To re-iterate how serious LPs will get, he further suggested that GPs get on with closing funds: "Don't waste time and attorney fees worrying about cause and bad acts; if something goes wrong, (LPs) will find a way out."

Finally, he said that while there is a lot more worry of LP default, he is not yet witnessing it in the US, suggesting that GPs may be experiencing this but stepping in to take over the interest.

Today's event is the second annual South Africa Congress organised by unquote" in association with the South African Venture Capital Association (SAVCA) and is sponsored by Brait Private Equity, KPMG, White & Case, Control Risks, Greenpark Capital, Vunani Private Equity Partners, eFront, ADC, Investment Data Services and Investec Capital Markets. www.southafricapecongress.com

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