Assume you are a financial analyst in an investment bank. You are currently reviewing the performance of some private equity funds so that you can provide advice to your clients. Below is the information of the private equity funds ACE I and KGC I. Produce a short report. In the report, you need to:

1. Compare terms of funds and discuss how it could potentially impact the interests of GPs and LPs.
2. Compare performance of two funds on the report date. The discussion should be supported by performance evaluation calculations. You can select any performance evaluation calculations that you deem suitable. You can also make assumptions when calculating. For example, you can assume the management fees are paid based on paid-in capital and the total return method following first alternative is used for distribution waterfall.

ACE I

Established in 2010				Type: Development Capital
Fund	Vintage	Actual Fund size (£Millions)		Capital Called%	Management %	Carried Interest%	Hurdle Rate	Term	Report Date
ACE I	2013	300.0		90.0	1.0	20.0	10.0	2023	31/12/2018
Note: Clawback provision is included: Distribution water fall: Total return

ACE I	2013	2014	2015	2016	2017	2018
Called-down	120	40	40	20	10	40
Realised value	0	0	100	80	40	80
Unrealized value	-15	0	20	60	70	20
Distribution	0	0	60	65	60	60

KGC I

Established in 2011				Type: Development Capital
Fund	Vintage	Actual Fund size (£Millions)		Capital Called%	Management %	Carried Interest%	Hurdle Rate	Term	Report Date
KGC I	2012	350.0		95.0	2.0	15.0	8.0	2024	31/12/2018
Note: Clawback provision is not included; Distribution water fall: Total return

KGC I	2013	2014	2015	2016	2017	2018
Called-down	130	50	50	40	20	30
Realised value	0	0	0	100	90	90
Unrealized value	0	-18	-5	80	40	30
Distribution	0	0	0	90	80	70

Answer rating: 100% (QA)

Short Report on ACE I and KGC I Private Equity Funds 1 Comparison of Fund Terms and Impact on GPs and LPs a ACE I Fund Vintage 2013 Actual Fund Size 3000 million Capital Called 900 of the fund size Ma... View the full answer