Fund Structure

Liable beyond its commitment, the GP makes all decisions on behalf of the partnership - typically the investment decisions - coordinates operations, and is responsible for compliance and risk management (see Limited Partner).

In Norway also called a "silent partner" - an apt description. The LP funds the partnership per the LPA up to its commitment but takes no part in operating the fund, and its liability is capped at that commitment.

In many jurisdictions LPs' identities remain hidden from the public, and often only the GP knows the identity of all LPs.

A vehicle that pools a number of investors into a common investment vehicle.

Feeders are often set up for smaller investors who can collectively make a larger investment than alone - useful since the most successful managers run funds with high minimum commitments. Feeders may also group investors of a particular nationality who benefit, for regulatory or legal reasons, from investing through a larger vehicle.

Where two or more investors share ownership of an investment.

The reason may be necessity - a fund or investor with limited resources, or building a diversified portfolio, may not want the full exposure; co-investors reduce exposure and make otherwise out-of-reach deals possible.

Large fund investors may also negotiate the right to be offered co-investment opportunities during the investment period, usually with no or low fees. Averaged across the fund commitment and the co-investments, their effective fees are lower than on the fund commitment alone.

A fund with no fixed life - no date by which investments must be terminated and the fund wound up. Listed evergreens aim to always allow an exit (though liquidity may constrain it); unlisted evergreens normally have periodic redemption and subscription rights.

A representative group of the fund's Limited Partners. Its mandate is not to make investment decisions - the LPA is usually emphatic that investment input is outside its scope; that is what the GP and adviser are paid for.

The IC normally receives a fuller report on the fund's operation than other participants, and is consulted on conflicts of interest and other matters where the GP wants investor input. It works for, and promotes the interests of, all investors.

One or more additional structures acting in parallel and on substantially the same terms as the main structure, making the same investments in proportion to their size.

As with feeders, parallel structures usually group investors with the same obligations - same jurisdiction, regulation or tax treatment - or with shared investment restrictions.