carry

English translation: a share of the profits

01:16 Feb 20, 2019

English language (monolingual) [PRO]
Bus/Financial - Finance (general) / Private equity

English term or phrase: carry

LP (limited partner) tender offer is a form of GP-led secondary transactions. One of its benefits for GPs (general partners) is:

"GP will continue managing assets, with an opportunity to earn additional fees and carry (subject to LP approvals) from the buyer."

What does carry mean? Does it mean the additional fees are borne by the buyer?

Karen Zeng KudoZ activity Questions: 25 (1 open) (2 without valid answers) (4 closed without grading) Answers: 10 China
Local time: 03:40

Selected answer:a share of the profits

Explanation:
Carried interest is a share of the profits of an investment paid to the investment manager in excess of the amount that the manager contributes to the partnership, specifically in alternative investments i.e., private equity and hedge funds. It is a performance fee rewarding the manager for enhancing performance.

Selected response from:

David Hollywood
Local time: 16:40

Grading comment

3 KudoZ points were awarded for this answer

SUMMARY OF ALL EXPLANATIONS PROVIDED

4 +2

a share of the profits

David Hollywood

interest or other costs or opportunity costs

Carolina Finley

Answers

55 mins confidence:

peer agreement (net): +2

a share of the profits

David Hollywood
Local time: 16:40
Does not meet criteria
Works in field
Native speaker of: English
PRO pts in category: 43

4 hrs confidence:

interest or other costs or opportunity costs

Explanation:
Carry is the cost to the buyer that is above the cost of the actual security or commodity. This is not an additional fee but a cost to hold the investment. That could mean interest costs if the buyer is financing the investment or buying on margin or storage costs if the investment is a commodity (soybeans, for example) where the physical has to be stored somewhere. It is more strictly speaking defined as a quantifiable cost born by the buyer than as a profit. In this case it can add to the profits of the GPs, as they might provide the financing for example.

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Note added at 10 hrs (2019-02-20 11:18:22 GMT)
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Carry is short for 'cost of carry'.

Reference: http://https://www.investopedia.com/terms/c/costofcarry.asp

Carolina Finley
Local time: 21:40
Does not meet criteria
Native speaker of:

English

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English translation: a share of the profits

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