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?
00:56:09 · Guillaume Moubeche, Peter Singlehurst
[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? [00:56:33] S0: Well, your question is about, like, sort of what mistakes do we make and how do we learn and improve for those mistakes. I mean, that... That's not a question for the last two minutes. That's a question for a whole another podcast, I think. Yes. Of course, we've made mistakes, and, yes, of course, we've learned from them. But one of our highest profile mistakes was Northvolt. You know? That was a very bad investment for us. What did we get wrong there? I think we were too enamored with the need for a company like Northvolt. And we thought we were taking growth equity risk, and, actually, I think we were taking venture equity risk. So the company, you know, had these large take or pay contracts, was actually very early in its execution journey and its revenue generation. So what do you learn from that? Well, you make sure that you focus much more on execution. You try to avoid the sort of thematic style investing with very much bottom up stock pickers. And and you make sure that if you're investing in a company, it's genuinely a growth stage company, not a venture stage company masquerading as a growth stage company.
00:56:33 · Peter Singlehurst, Guillaume Moubeche
[00:56:33] S0: Well, your question is about, like, sort of what mistakes do we make and how do we learn and improve for those mistakes. I mean, that... That's not a question for the last two minutes. That's a question for a whole another podcast, I think. Yes. Of course, we've made mistakes, and, yes, of course, we've learned from them. But one of our highest profile mistakes was Northvolt. You know? That was a very bad investment for us. What did we get wrong there? I think we were too enamored with the need for a company like Northvolt. And we thought we were taking growth equity risk, and, actually, I think we were taking venture equity risk. So the company, you know, had these large take or pay contracts, was actually very early in its execution journey and its revenue generation. So what do you learn from that? Well, you make sure that you focus much more on execution. You try to avoid the sort of thematic style investing with very much bottom up stock pickers. And and you make sure that if you're investing in a company, it's genuinely a growth stage company, not a venture stage company masquerading as a growth stage company. [00:57:30] S1: Super interesting. I would... I could be talking about this for hours, and I didn't really see, like, the time passed by. So thanks for the quick reminder. So, Peter, like, thanks a lot, like, for your time. Wake up and people, like, follow you and follow your updates and Baillie Gifford or so.