ITEM 5 – FEES AND COMPENSATION
Fees for Private Funds are typically calculated based on a percentage of the capital investors have
committed to such Private Fund, with percentage fee breakpoints for individual investors that
commit capital up to certain levels of total capital commitments or that commit capital early. The
percentage fee rate generally declines following a specified investment period. The Manager
does not negotiate Private Fund management fees with individual investors, although it may
waive or reduce these fees for investments by its employees and other affiliates. The private
placement memorandum or similar document for each Private Fund provides detailed disclosure
of management fees and other expenses. Management fees for each Separate Account are
individually negotiated with each client. In addition to management fees, each Private Fund (and
certain Separate Accounts) also has Carried Interest arrangements with the Manager or its
affiliates, as described below under “Performance-Based Fees and Side by Side Management”.
The Manager has implemented the following procedures to ensure that advisory fees are
calculated and debited correctly:
• The Chief Financial Officer or his/her designee enters the fee schedule applicable to each
Managed Account into its accounting system upon the account’s inception, consistent with
the fee structure stipulated in each Managed Account’s governing documents.
• Fee schedules may only be changed with a Managed Account’s written consent. The Chief
Financial Officer or his/her designee inputs any authorized fee schedule changes in the
Manager’s portfolio accounting system.
• Each client generally pays an annual management fee, payable quarterly in advance,
beginning to accrue from the date of the initial closing, based primarily on a percentage of
committed capital.
The assets under management amount is reflective of the most recently reported fair market values of fund
investments as of September 30, 2016.
Avanz Capital Management LP Form ADV Part 2
• The Chief Financial Officer prepares invoices and debits fees. A Managing Principal reviews
the Chief Financial Officer’s fee billing activities and, on a sample basis, tests to ensure that
fees are calculated correctly in accordance with agreed-upon rates and methodologies. A
Managing Principal also compares the aggregate amount of fees collected with Manager’s
aggregate assets under management for reasonableness.
Each Private Fund bears its reasonable and properly incurred operating costs and extraordinary
expenses. Operating costs include: organization and syndication expenses (generally up to a
specified limit); legal fees and expenses incurred when reviewing and negotiating potential
investments; other costs related to the acquisition, ownership and sale of investments; research
expenses; auditing and tax preparation fees; and costs of investor reporting. Expense provisions
for Separate Accounts are negotiated with the client. Managed Accounts also may incur
brokerage commissions and other transaction costs, as described below under “Brokerage
Practices.”
From time to time, the Manager may incur fees, costs and expenses on behalf of more than one
Managed Account. To the extent such fees, costs and expenses are incurred for the account or
benefit of more than one Managed Account, (i) if such amounts relate to a specific investment,
each Managed Account will typically bear an allocable portion of any such amounts pro-rata
based on the size of its investment commitment to the entity to which the expense relates (or
such other non pro-rata manner as the Manager determines, in its sole discretion, to be fair and
reasonable, and (ii) if such amounts do not relate to a specific investment, each Managed Account
will typically bear an allocable portion of any such amounts based on such criteria as the Manager
determines, in its sole discretion, to be fair and reasonable. The Manager seeks to allocate such
fees, costs and expenses on a fair and reasonable basis. Not withstanding the foregoing, the
Manager may in the future develop policies and procedures to address the allocation of expenses
that differ from its current practice. The Chief Compliance Officer is responsible for establishing
such allocation methodologies. Documentation demonstrating that the allocation methodology
has been applied correctly is retained by the Chief Compliance Officer.
Affiliates of the Manager are in some cases entitled to receive a Carried Interest payment (as
described below under “Performance-Based Fees and Side-By-Side Management”) based on
realized profits, and might be required to return all or a portion of that Carried Interest because
of later-realized losses. This potential refund, commonly referred to as a “clawback”, generally
would be paid at the termination of the Managed Account, in accordance with detailed provisions
included in the Managed Account organizational documents.
Neither the Manager nor its supervised persons receive any sales compensation from Managed
Account clients or third parties in connection with the distribution of its investment products.
From time to time, third party investment firms might establish "feeder" funds through which
that firm's clients will invest in a Private Fund. The Manager might charge such feeder funds
higher fees or expenses than those charged to other investors in the Private Fund, and pay a
management, administrative or placement fee to the firm sponsoring the feeder fund. The
Manager requires the sponsors of such feeder funds to fully disclose to feeder fund investors all
fees and expenses borne by such investors, whether charged directly by the feeder fund or its
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