The Meaning of a Hurdle Rate in Private Equity?

Ropa Ushe
July 4, 2025

The minimum internal rate of return (usually 8%)
that private markets fund investors have the right to
receive before the manager starts to collect its share
of the return. In effect, the hurdle rate ensures that
the manager shares the profits of the partnership
only to the extent that investments perform above a
certain level. This is also referred to as the ‘preferred
rate of return’.

Ropa Ushe

There will be a pressure to get this next appointment right and I do believe the process to find that replacement will have started a few weeks ago following that Tottenham game. The results have been a killer but equally so the team has lacked an identity and style. It’s critical that whoever is brought in now delivers that. With performance comes results. You can’t disconnect these two factors. The challenge for the new manager is he’s going to have to work with the majority of this curren