“What is really attractive about the independent sponsor model is not having investments cross-collateralized,” says Nathan Chandrasekaran.
A PE Fund Manager earns carry on the aggregate performance of the portfolio. So one bad portco will drag and dilute the fund, thereby compromising the carry.
For an independent sponsor, however, each deal stands on it own. A bad deal will simply not produce any carry, but it won’t encumber any other deals.
