Background
The Defendant (SISU) is a limited liability company that carries on two types of business:
(1) hedge fund, and
(2) private equity business.
It is the private equity business with which this claim is concerned.
The Defendant secures investment capital. It uses that capital to invest in distressed businesses in return for an equity stake. Its plan is to turn around the failing business and then to realise the equity stake at a profit.
The investment funds have a lifespan of 8 years, which can be extended to 10 years.
The Defendant's private equity business makes money by:
(1) Receipt of a management fee of 0.2% paid by the company in which the investment is made, and
(2) Receipt of a fee from the General Manager. The General Manager charges a management fee of 2% per annum of the funds invested and passes that (or part of it) to the Defendant as Investment Manager.
In addition, the individuals who secure the investment and manage the funds can themselves share in the profit. This is done by the formation of a vehicle to receive a share in the profits from the investments. In this case that was SISU Carry Partners LP ("the Carry Partnership").
