Private Equity Investor (PEI), the UK-listed fund of funds, and other investors have negotiated management fee reductions from a number of venture capital firms.

The reductions address one of the currently most contentious issues in private equity. Firms with large funds can derive considerable revenues from management fees, on top of their share of the fund's ultimate profits. According to Tim Childs, PEI's managing director, the $2.2bn (E2.2bn) fund managed by New Enterprise Associates has a management fee of 0.77%. This gives the firm a regular annual income of $17m, more than $500,000 per partner, from that fund alone.