Capital call
A capital call, also called a drawdown, is a notice from the general partner requiring each limited partner to wire a portion of their committed capital to the fund by a due date, usually ten business days, to fund investments, fees or expenses.
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Example
A $50M fund calls 10% of commitments to fund a $4M investment and $1M of fees and expenses. An LP with a $5M commitment receives a notice for $500,000, due in ten business days, with the purpose split out by category and wire instructions in the portal.
Confused with
Drawdown. The same thing. Drawdown is the term used in Europe and in bank credit facilities; capital call is the American usage.
Distribution. The opposite direction: money from the fund to the LP.
See the first capital call guide for the procedure.
Related terms
- Capital account A capital account is the running balance of a single partner's economic interest in a fund: contributions in, allocations of income, gains and losses, less distributions out.
- Management fee The management fee is an annual charge paid by the fund to the management company, typically 2% of committed capital during the investment period, often stepping down afterwards to a lower rate or a basis of invested capital, to cover salaries, rent and the cost of running the firm.
- Distribution waterfall A distribution waterfall is the sequence in which a fund's proceeds are allocated between limited partners and the general partner, typically return of contributed capital first, then a preferred return to LPs, then a catch-up to the GP, then the remaining profit split at the carried interest rate.