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Beroni Group: Managing General
Partners–Limited Partner
Relationships
Group 3
Delivered to: Viney Sawhney, Peter Gianonatti
Students: Yi You,
Fernando Garcia de Rojas,
Pedro Morais,
Carolina Pierry,
Dennis Pei,
Ahmed Idrees
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1a) How should Jack Draper deal with allocation of deal flow between the different
funds that had overlapping mandates, and/or between one of his current funds and an
eventual successor fund? Explain your answer. (There are many optional ways to invest,
e.g, BAF II first; BAF III first; proportionately between BAF II and BAF III;
discretionary investment-by-investment decision)
Typically, new funds should not be raised unless assets of the previous fund have
already been allocated. Although Mr. Draper should first finish investing BAFII, where there
is one more year left in the investment period and $135 million left to invest, he will ask both
Advisory Committees to co-invest in this attractive deal. He should divide the deal based on
the 10% threshold that funds typically have on investment concentration. So that means that
up to $35 million should go to BAF II and up to $50 million to BAFIII (using only closed
funding and not additional funding). If the deal is smaller than that, he should divide the deal
evenly between the two funds, where he will not favor one versus the other. He does not want
to upset existing Limited Partners who were with him from the beginning, nor does he want
new Limited Partners to think they are not being treated fairly. These decisions should be made
on a case by case basis and there should not be any set guidelines on the funds about co-
investment opportunities with other funds.
