More than 55% of Asian private-equity funds charge a flat management fee of 2% on committed capital, compared to the global average of 40%. That's money for old rope when the fund is over a $1 billion, where the average fee is just under 2%. The newly launched $2.5 billion Carlyle Asia Partners 3 fund, for instance, charges 1.5%.

The International Limited Partners Association (ILPA) which represents the interests of private-equity investors, published a document titled 'ILPA Private Equity Principles' in September, which places a big focus on fees. 

Hong Kong-based fund-of-private-equity-funds house Squadron Capital has undertaken a survey of 90 PE firms that were set up in 2008 and 2009 to discover whether they are abiding by these principles.

PE firms often receive additional income from being board members of their portfolio companies and fees for providing them with additional services. Good practice says that rather than pocketing this money, they should offset it against the management fees they charge.

No prizes for guessing what comes next. Only 48% of Asian funds do offset those receipts in full against management fees; the global average is 43%. In Asia, 20% of PE funds offset less than 60% of receipts. Such a state of affairs risks leading investors to think that their private-equity firm is only in it for the money.

An area where Asia comes out ahead of the pack is with regard to the terms dictating 'distribution waterfalls'. 99% of Asian funds follow ILPA best practice, which is to repay investors in full, plus a minimum profit hurdle (usually set at around 8%), before getting performance fees. Elsewhere in the world, only 28% of funds do likewise, leading to situations where PE companies get paid before investors.

"All GPs are falling short of ILPA principles, Asian ones less so, and as an LP we would like to see more convergence," says David Pierce, chief executive of Squadron Capital. "It's surprising, though, how uniform the sector is with its terms. It seems easier for GPs not to buck the trend and to put out similar documentation [that governs their funds]."

The rest of the survey corroborates these comments. There are a lot of similarities between the terms being offered, so perhaps an equilibrium has been struck.

Separately, Squadron Capital has hired Shi Xiaoni as an associate in its Hong Kong investment team. She is the 12th member in that growing team, and used to work for UBS and Merrill Lynch in Hong Kong.