Item 5: Fees and Compensation
General
Surgo provides investment advisory services to each of its Clients pursuant to separate investment
advisory agreements or other applicable documentation (the “Agreements”). The Agreements for
each Client, including the specific Governing Fund Documents, set forth in detail the fee structure
relevant to each such Client. The terms of the Agreements are generally established at the time of
the formation of the applicable Client.
Surgo receives compensation from fees based on a percentage of assets under management and
carried interest allocations. Investors are also subject to certain other fees or expenses related to
transactions (see below) in connection with their investment in a Client. Investors should review
all fees and expenses as set forth in the Agreements.
Management Fee
With respect to the Funds, Surgo charges a management fee (the “Management Fee”) that varies
depending on the applicable share class and generally ranges from approximately 0.875%-1.75%
(per annum) (and could be lower for certain share classes) as further described in the Governing
Fund Documents. The Management Fee is payable quarterly in advance based on the balance of the
capital account of each Limited Partner as of the first day of each quarter, and in accordance with
the Governing Fund Documents. The Management Fee is prorated and payable as of the date of
any capital contribution by a Limited Partner that is effective other than as of the first day of a fiscal
quarter, and in the event of a withdrawal by a Limited Partner other than as of the last day of a
fiscal quarter, an amount equal to the pro rata portion of the Management Fee based on the actual
number of days remaining in such fiscal quarter is credited to the Capital Account of the Limited
Partner. Surgo and its affiliates have in the past and expect in the future to waive or reduce
management fees for certain investors, including but not limited to employees, advisors and
consultants, as well as certain Limited Partners that have entered into an investment or other
arrangement with Surgo or the Funds and that Surgo determines is a strategic investor of the
Funds, or that Surgo otherwise determines is a value-add investor primarily for the benefit of the
Funds (each, a “Strategic Investor”), along with others as may be determined in Surgo’s sole
discretion.
With respect to the Funds, the Management Fee and the amount of any Incentive Allocation is
calculated (subject to review by Surgo) and deducted from the respective Fund by the Fund’s
Administrator, Morgan Stanley Fund Services USA LLC and Morgan Stanley Fund Services
(Cayman) Ltd., as applicable (each referred to herein as, “MSFS” or “Administrator”).
Form ADV Part 2 Brochure | SurgoCap Partners LP
Management Fees assessed on investments in the Funds by Surgo-Related Investors (as defined
below) are waived entirely. “Surgo-Related Investor” means the Managing Principal and any other
member, partner, affiliate and employee of the General Partner or Surgo, any member of the
immediate family of any such person, and any trust or other entity established for the benefit of
such person, and any member of the advisory committee of Surgo that invests directly or indirectly
in the Funds.
Performance-based Compensation
An affiliate of Surgo that serves as general partner to the Funds (the “General Partner” and
together with the Limited Partners, the “Partners”) may also be entitled to annual performance-
based compensation (“Incentive Allocation”) that varies depending on the share class and ranges
from 10%-20% as applicable, and as further described in the Governing Fund Documents. The
Incentive Allocation is based on the share of net capital appreciation of the assets of the Fund
allocated to each Limited Partner’s capital account after a reduction for an amount equal to the
Management Fee attributable to such Limited Partner’s capital account, and its portion of any other
expenses of the Fund (as described below), all subject to a “high water mark.”
Surgo (or an affiliate of Surgo) may be entitled to be paid performance-based compensation by
certain other Clients that is solely based on a share of realized net profits or capital appreciation of
the assets of such Clients (together with the Incentive Allocation, “Performance-Based
Compensation”). The Performance-Based Compensation ranges from 0%-10% of a Client’s
realized net profits or capital appreciation. Performance-Based Compensation may be subject to
hurdles and/or “clawback” provisions.
Incentive Allocation amounts assessed on investments in the Funds by Surgo-Related Investors (as
defined above) are waived entirely. The Incentive Allocation may be waived, reduced or calculated
differently with respect to certain Limited Partners, including, without limitation, Surgo-Related
Investors and any Strategic Investor.
More detailed information about the fees and the Incentive Allocation paid by or allocated to, as
applicable, investors in the Funds is included in the applicable Governing Fund Documents, and
the fees and Performance-Based Compensation applicable to other Clients are as set forth in the
Client’s Agreement or other governing document, as applicable.
Other Expenses Charged to the Funds
In addition to any management fee or Performance-Based Compensation applicable to a particular
Client, a Client will bear other fees and expenses. The fees and expenses vary by Client, but
typically include, among other things: (i) the management fee, if applicable; (ii) expenses related to
the research, due diligence, financing, settlement, monitoring and disposition of actual and
prospective investments, whether or not such investment is consummated, including the following:
investment sourcing, finding, placement, management, incentive, consulting and other fees
(including, without limitation, performance-based fees) paid to third parties unaffiliated with Surgo
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