What is the structure of a private equity fund?

What is the structure of a private equity fund?

A private equity fund typically has a limited partnership structure, consisting of general partners (GPs) and limited partners (LPs). The GPs manage the fund and make investment decisions, while the LPs provide the capital.

How do the general partners and limited partners differ?

General partners are responsible for the fund's management and operations, while limited partners are investors who provide capital but have limited involvement in management.

What are the typical fees associated with private equity funds?

Private equity funds usually charge a management fee, typically around 2% of committed capital, and a performance fee, often 20% of profits.

Can you explain the term 'carried interest'?

Carried interest is the share of profits that general partners receive from the fund's investments, usually after returning the initial capital to limited partners.

What are the risks involved in investing in private equity?

Investing in private equity involves risks such as illiquidity, market risk, and the potential for loss of capital, as investments are often in early-stage or distressed companies.