PEINVEST
The entity responsible for managing a PE fund, making investment decisions, and overseeing portfolio companies. The GP typically contributes 1-5% of total fund capital and receives management fees and carried interest as compensation.
An investor in a PE fund who provides capital but has limited involvement in fund management and investment decisions. LPs include pension funds, sovereign wealth funds, endowments, insurance companies, family offices, and high-net-worth individuals.
The share of profits that the general partner receives as compensation, typically 20% of fund profits above a specified hurdle rate. Carry aligns the GP's interests with those of the LPs and is the primary performance-based incentive for fund managers.
An annual fee paid by LPs to the GP for fund management, typically 1.5-2.0% of committed capital during the investment period and invested capital thereafter. Management fees cover the GP's operating expenses including salaries, rent, and deal sourcing costs.
The capital contributed by the general partner to their own fund, typically 1-5% of total fund size. GP commitment aligns the fund manager's interests with those of limited partners by ensuring the GP has meaningful capital at risk.