00:51:29 · Peter Singlehurst
[00:51:29] S0: a company. Now I would love to be able to tell you we get it right every time. We don't. So, certainly, our funds don't return five times. They've they've got some good returns on them, but not five times. We set that level of five times because it forces us to be ambitious and try to identify outliers. Sometimes... In fact, it's very rare that we find a company that does exactly five times. Like, normally, they either do a lot more less. So the five times is more of a a heuristic or a methodology to help us try to find outliers. With regards to distributions, distributions, so it depends which fund we're talking about. So we manage a number of different pools of capital. We have our first fund, the Schiehallion Fund that I mentioned to you already. That's a permanent pool of capital. It's an evergreen structure. That So fund actually has a mandate to own, if it wants, for a really long time into the public markets. So in that fund, for instance, we still own Affirm. We still own Wise. We still own Tempus. You know, these companies will be in public for a long time. Some of our clients want us to do that. However, we have another group of clients that say, hey. I want a slightly more traditional private company experience. For those clients, we have limited life funds, and those funds... Once companies become public, they're more likely to look for liquidity probably within the first couple of years of a company being public.
00:52:47 · Guillaume Moubeche
[00:52:47] S1: Okay. And and the fund is structured in a way where you take both... Because I'm wondering when you're like a a really, like, long, long term investor like this, do you also take carry and management fee like every fund? Because, I mean, as an investor eventually, you know, like, I mean, you're... It's it's also you like taking the risk and it's cool that you are rewarded for the risk you take. So I think carry is like the best way to align both the investor and the LP. So as a as a, like, fund manager and investor, like, do you get the carry, like, in the same way as every other fund, or how does that work exactly?
00:53:25 · Peter Singlehurst, Guillaume Moubeche
[00:53:25] S0: So, again, it slightly depends which fund we're talking about. So the first fund that we launched, the Schiehallion Fund, actually doesn't have a carry fee. Okay. It has net asset value based fees, so it still provides alignment. Our management fee grows if the value of the fund grows. Fee goes down if the value of the fund shrinks. So we align that way. Our more traditional funds have carried interest structures and more conventional management fee structures. However, we've deliberately striated to keep those fees fair. So our... We we will charge on invested capital rather than committed capital, which actually makes a really big difference on the fees that investors pay in the early years of a fund. And our management fees and our carried interest fees are actually quite a lot lower than you would typically associate with an investor of our client. And we've done that just because we... We're trying to give this this this this capability to our clients of what we believe is the right and fair price. And, frankly, for many of our peers, I think their fees have got a little bit ahead of themselves. [00:54:28] S1: Can you share, like, the the numbers, or is it Yeah.
00:54:28 · Guillaume Moubeche, Peter Singlehurst
[00:54:28] S1: Can you share, like, the the numbers, or is it Yeah. [00:54:32] S0: So our so our main funds have a a sort of a base one and ten structure. So Okay. Half of what you would see with the the the small sort fund. Now in our more recent fund, at higher levels of return, there are step ups in that carry. Again, that's sort of incentivizing those kind of very, very high levels of return. But we start at one and ten. We have an 8% hurdle charging on invested rather than committed carry. These are, you know, very, very LP friendly fees. [00:54:58] S1: Yeah. That's that's crazy because I've seen, like, two twenty five, two twenty are, like, being the the norm. Okay. That's that's interesting. And, yeah, I was... Like, on the on the DPI, like, do you also, like, do sometimes, like like, if you have LPs, for example, in a fund who wants actual DPI, do you like... How exactly does that work? Like, when an LP said, you know, like, hey, I would like maybe a bit more cash. Like, are they all long term or are they sometimes people, you know, who want liquidity? And then, like, do you have to to make this work for them? Like... Or how exactly does that work?
00:54:58 · Guillaume Moubeche, Peter Singlehurst
[00:54:58] S1: Yeah. That's that's crazy because I've seen, like, two twenty five, two twenty are, like, being the the norm. Okay. That's that's interesting. And, yeah, I was... Like, on the on the DPI, like, do you also, like, do sometimes, like like, if you have LPs, for example, in a fund who wants actual DPI, do you like... How exactly does that work? Like, when an LP said, you know, like, hey, I would like maybe a bit more cash. Like, are they all long term or are they sometimes people, you know, who want liquidity? And then, like, do you have to to make this work for them? Like... Or how exactly does that work? [00:55:37] S0: I I think we're lucky to have a very long term group of clients, many of whom have worked with us for decades in the public markets and then who we also work with in the private markets. Most of these funds are pooled funds. So you you can't do what a single LP is asking you to do because that will then apply to the rest of the client base. And so, yeah, ultimately, we have to do what we believe is right for all for all clients and all investors in their fund... Those funds and sort of treat them all fairly. And sometimes that means distributing sooner, and sometimes it means distributing later.
00:55:37 · Peter Singlehurst, Guillaume Moubeche
[00:55:37] S0: I I think we're lucky to have a very long term group of clients, many of whom have worked with us for decades in the public markets and then who we also work with in the private markets. Most of these funds are pooled funds. So you you can't do what a single LP is asking you to do because that will then apply to the rest of the client base. And so, yeah, ultimately, we have to do what we believe is right for all for all clients and all investors in their fund... Those funds and sort of treat them all fairly. And sometimes that means distributing sooner, and sometimes it means distributing later. [00:56:09] S1: Okay. And I know we're almost, like, out of time, so I would love to know like, is there like, is there an investment you've made that you really kind of like regretted or were looking at it backwards, you're like, I should have known better and here like are the things that I would do, like, differently or that I'm doing differently to avoid this kind of of, like, mistakes?