Carlyle and CVC have agreed to permit UBS to take a share of performance-related fees in return for the Swiss bank distributing their private capital offerings to high-net-worth clients, according to people familiar with the arrangements.
Sources told the Financial Times that Carlyle will share carried interest from an evergreen secondaries fund, citing three people familiar with the matter. Two people familiar with the situation said CVC has likewise agreed to allow UBS to share in performance fees from an evergreen fund.
The reports say not all private capital managers approached by UBS accepted such terms. At least two other managers of sizable private capital funds aimed at individual investors declined the bank’s requests to share fees, people familiar with those discussions told the newspaper.
According to the reporting, there is no suggestion that the agreements between UBS and the two firms led to higher fees for the end investors who buy the funds through the bank.
UBS provided a statement making clear that the selection of private capital partners was made on the basis of the bank’s investment and due diligence process. The bank’s comment, as reported, framed the arrangements as part of its commercial distribution activity conducted alongside its internal diligence.
The available details are limited to what those familiar with the negotiations have described. Carlyle’s arrangement is reported to involve a share of carried interest specifically from an evergreen secondaries vehicle, while CVC’s concession relates to performance fees in an evergreen fund. The reporting cites multiple unnamed sources for those specifics.
Theft of further detail in the public reporting is constrained; the accounts rely on a small number of people close to the negotiations and do not include additional documentation or figures showing how fees are allocated or the precise mechanics of the revenue sharing. The reporting also indicates a divergence in responses from other private capital managers, with at least two declining UBS’s fee-sharing proposals.
For investors and market participants, the episode highlights the ways in which distribution arrangements between banks and private capital managers can be structured, while leaving unresolved questions about how common such deals may be and how they are disclosed. The parties involved have characterized the arrangements as consistent with their commercial and selection processes, and the reporting does not allege that investor costs were increased as a result.