PE managers mush for higher carried interest in continuation deals
Private equity firms are increasingly seeking enhanced carried interest arrangements on single-asset continuation vehicles, as managers look to capture a larger share of future gains from investments they are holding beyond the life of their original funds, according to a report by Bloomberg.
Private equity firms are increasingly seeking higher carried interest arrangements, known as "super carry," in single-asset continuation vehicles, according to a Bloomberg report. This trend, highlighted in research by PJT Partners, saw super carry provisions in nearly a third of these vehicles during the first half of 2026, nearly tripling from the previous year.
"Super carry" refers to carried interest above the usual 12% to 20% range. The increase in such arrangements reflects the enhanced negotiating power managers can wield over their most valuable assets, even as the broader private equity sector struggles with investment exits and capital returns to limited partners. For instance, Parthenon Capital Partners sought enhanced economics for its Kroll Bond Rating Agency stake, with HarbourVest Partners backing the deal, allowing Parthenon to raise over $1.7bn for the single-asset continuation vehicle.
Super-carry arrangements typically come with performance triggers, such as a 30% internal rate of return or a three-times return on invested capital, which managers only achieve if the continuation vehicle performs well. While these structures can incentivize managers to maintain value creation post-transfer, they also raise the bar for investors assessing potential returns against the higher economics.
Some firms, like Lightspeed Venture Partners, have faced resistance from lead investors over such provisions.
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