Integrato Digital

Tuesday, 27 October 2026

Question of the day: NISM Series XIX-A

Chapter 3 · Concepts in the AIF IndustryMedium

A clawback provision requires the manager to:

  • AReturn management fees every year
  • BReturn any carry above its agreed final share
  • CBuy back all investors' units at cost
  • DPay investors a guaranteed return
Clawback corrects over-distribution of carry, which is most likely under deal-by-deal waterfalls.
The concept: Fees, hurdle, carried interest and the waterfall
Worked example

A fund draws ₹100 crore and returns ₹180 crore in total. Profit = ₹80 crore. With a 20% carry and full catch-up, the manager's carry is 20% × ₹80 crore = ₹16 crore, and investors receive ₹164 crore.

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