Risk Management · Clawback
Clawback Analysis & Escrow
Investment Thesis
LP Protection Through Rigorous Escrow Mechanics
Whole-fund European waterfall structure with 30% carry escrow eliminates early distribution risk. Stress-tested across 4 scenarios from base case to catastrophic, ensuring GP alignment and LP capital preservation.
Implication 1
Base case shows zero clawback exposure — fund performance well above hurdle with diversified exit timing.
Implication 2
Even under severe stress (-40% NAV), escrow reserves plus GP guarantees provide full LP recovery coverage.
Escrow Rate
30%
Of carry distributions
Base Case Carry
$335MSafe
No clawback risk
Downside Carry
$192M-43%
-20% NAV scenario
Max Clawback
$290M
Catastrophic scenario
Clawback Scenario Analysis
Base Case60% probability
All portfolio companies exit at current NAV
Total Distributions
$3.6B
GP Carry
$335M
Clawback Risk
None
Downside (-20% NAV)25% probability
Market correction reduces exit multiples
Total Distributions
$2.9B
GP Carry
$192M
Clawback Risk
None
Severe (-40% NAV)10% probability
Deep recession, 2 portfolio write-downs
Total Distributions
$2.2B
GP Carry
$47M
Clawback Risk
$85M
Catastrophic (-60% NAV)5% probability
Multiple bankruptcies, total portfolio impairment
Total Distributions
$1.4B
GP Carry
$0M
Clawback Risk
$290M
Clawback Escrow Mechanics
Fund IV LP protectionsESCROW PROVISIONS
Holdback: 30% of all carry distributions held in escrow
Release: Escrow released upon fund liquidation or when LPAC determines no remaining clawback risk
Guarantee: Individual GP partners jointly and severally liable for clawback obligations
Tax offset: Clawback calculated net of taxes paid on carry distributions
LP PROTECTIONS
Whole-fund waterfall: Carry only after ALL capital + pref returned (not deal-by-deal)
True-up: Annual waterfall recalculation ensures GP never receives excess carry
LPAC oversight: Advisory committee reviews all distributions and clawback calculations
Third-party audit: Annual fund audit by Big 4 includes carry calculation verification