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Considers the decision faced by state pension fund manager Rod Calhoun as he decides whether to invest $200 million in Bain Capital's eleventh global buyout fund: Bain Capital Fund XI. For the fund, Bain was offering its limited partners a choice among three different fee structures: first, a "conventional" fee structure of a 1.5% management fee with 20% carried interest and a 7% preferred rate of return; second, a 1% management fee with 30% carried interest and a 7% preferred rate of return; or third, a 0.5% management fee, 30% carried interest, and a 0% preferred rate of return. Should Calhoun invest in Bain? If he should, which fee structure should Calhoun choose?

The case examines the aftermath of the March 2015 Centerbridge Partners acquisition of Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management.

The case examines the March 2015 Centerbridge Partners investment decision regarding whether to acquire Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management. The case allows for discussion of strategic and financing considerations by Centerbridge, a New York-based investment firm employing a flexible approach across investment disciplines: private equity (PE); credit, distressed strategies, and special situations; and real estate. Students are presented the opportunity to perform valuation analysis and compare two possible forms of financing for the potential acquisition: 1) traditional corporate debt and bond financing and 2) commercial mortgage-backed security (CMBS) financing. Strategically, the case poses the questions: Was Centerbridge valuing Great Wolf correctly? Would CMBS be the optimal financing structure, and why had no other firm contemplated this type of financing? Would the company, in partnership with Centerbridge, be able to execute on operational improvements and growth strategy? Was the purchase price multiple of 9.4x warranted in light of the opportunity set? Would an established PE firm like Apollo ever leave enough on the table for a successor private-equity owner to generate gains without necessary multiple expansion?

In early 2016, David Sin, founder of the Singapore-based private equity group SIN Capital and chairman of its primary holding, Fullerton Health, was deeply involved in preparations for taking Fullerton public on the Singapore stock exchange. Three years after SIN Capital had invested in Fullerton, a provider of enterprise health management, and two years ahead of the original plan, it had attained a valuation of over S$1 billion. Listing the company would provide a number of important benefits as the management team and the investors expanded the operation throughout South Asia. This case describes the benefits and drawbacks of Fullerton's planned IPO, along with the strategy that had propelled its impressive growth. It also presents David Sin's vision for SIN Capital as a different type of private equity firm.

Since its IPO in 2007 and following the global financial crisis, Blackstone largely outpaced its alternative investment firm peers in assets under management, new business launches, profitability, and market capitalization. Under the leadership of Stephen A. Schwarzman, chairman and CEO, and president and COO Hamilton ("Tony") James, Blackstone's growth derived from substantial horizontal expansion into new alternative asset products and services, both organically and through acquisition. These included businesses in private equity, real estate, funds of hedge funds, alternative credit, opportunistic transactions ("Tactical Opportunities"), and secondaries investments. The firm has also innovated in sourcing capital from a variety of limited partners. Blackstone's culture of centralized investment processes and risk management coupled with entrepreneurial leadership contributed to its growth in important ways, but the firm faces important external and internal challenges as it seeks to continue its growth.

Unique accelerator fund in Latin America, facing challenges on how to keep growing, including development of venture capital fund and leveraging of entrepreneur ecosystem.

David Swensen and the Investments Office staff must decide whether to continue to allocate the bulk of the university's endowment to illiquid investments-hedge funds, private equity, real estate-given the impact of the recent market turmoil. The case explores the risks and benefits of a different asset allocation strategy and also considers how to classify some of the different assets. It highlights the issues around allocations across different subclasses, e.g., between venture capital, hedge funds, and real assets.

Okey Enelamah is the CEO of the African Capital Alliance (ACA), a private equity firm based in Nigeria. ACA has spent more than a year arranging a $500 million consortium bid to acquire and recapitalize Union Bank, Nigeria's sixth largest bank. Several weeks before the deal is scheduled to close, the unexpected exit of several international investors has put the group's ability to fund the deal in question. With time running out, Enelamah and the ACA investment committee must decide whether the Union Bank acquisition is still a wise investment, or whether the firm's time, talents, and capital would be better invested in other parts of the fast-growing Nigerian economy.

Abridged supplement for case 213102, for instructors who wish to have students review in class.

For decades, large companies have been wary of corporate venturing. But as R&D organizations face pressure to rein in costs and produce results, companies are investing in promising start-ups to gain knowledge and agility. The logic of corporate venturing is compelling: A well-run fund can help a firm respond quickly to changes in markets and gain a better view of threats. In some cases, it can stimulate demand for a company's own products. And its investments may earn attractive returns. During their first three years as public companies, firms backed by corporate venture funds show better stock price performance, on average, than companies backed by traditional VCs. Managing corporate venture funds is not easy. Some companies have seen their venture initiatives fail, and even firms with successful funds have struggled to make use of the knowledge gained from start-up investments. Six steps can help companies avoid the pitfalls: (1) Align goals. Corporate venture funds are more successful if the business of the corporate parent and of the portfolio firm overlap. (2) Streamline approvals. A complicated decision process can burden the fund with too many goals and lead to ineffective investing patterns. (3) Provide powerful incentives. Companies that don't offer adequate compensation to their venture capitalists will face a steady stream of defections. (4) Tolerate failure. A zero failure rate may indicate that the fund is playing it too safe. (5) Stick to your commitments. If a company is seen as a fickle investor, professionals will be wary of joining its venture unit, entrepreneurs will be reluctant to accept its funds, and independent VCs will be hesitant to join in. (6) Harvest valuable information. Companies need to invest as much in learning from their start-ups as they do in making and overseeing deals.

Supplement for case 213102

In April 2010, Salil Deshpande has recently resigned from Palo Alto, California-based Bay Partners (Bay) where he had been a general partner. Although Deshpande had built a successful track record at the venture firm, he resigned with two other Bay general partners as disagreement about internal economics and governance continued among the Bay's six-member management team. This triggered the "key man" clause in the limited partnership agreement of Bay's most recent fund, Bay XI. The case considers the options that Deshpande and the Bay XI limited partners face as the firm and fund's futures are thrown into doubt.

Whether the government or markets, or a mixture of both, can provide efficient and effective incentives for encouraging entrepreneurial activity and new venture financing is an age old question. Public promotion efforts are controversial and in most cases they tend to fail. In the United States, debate about the role of government in these areas can be traced back to at least the Great Depression and the period immediately after World War II when the issue became a particular concern. Policy makers considered that existing financial institutions could neither provide the necessary due diligence nor the pool of risk capital that was necessary to spur entrepreneurial ventures. Furthermore, there were calls for additional inducements in the form of tax related incentives. The mechanisms that were used raise questions about benefits, costs and unintended consequences. Can, and should, the government influence entrepreneurial activity and venture financing? What are the limits to government intervention?

The Canada Pension Plan Investment Board (CPPIB) is one of the largest and fastest-growing pools of investment capital in the world and follows an unusually active program of investment management. In October of 2012, Mark Wiseman was just 12 weeks into his role as chief executive officer, and he must decide how to lead the organization to outperform the market as it grows larger and more geographically disperse. After seven years of eschewing the use of intermediaries and successfully practicing its "do-it-yourself mega-investing" approach, CPPIB had garnered admiration from institutions on Bay Street and Wall Street alike. It had even been heralded as a "Maple Revolutionary" by The Economist. With assets under management projected to grow to C$275 billion by 2020, however, Wiseman faced the challenge of how to scale the organization's investment strategy for the future. As Wiseman settled into the chief executive's role, would he be able to lead CPPIB to meet its goals?