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Fund Closing

In what scenarios might an LP "pre-pay" a capital commitment to a Fund?

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Dec 05, 2023
Question reformulated for clarity, but of course let us know if it does not address the original question. 
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Accepted Answer
Dec 05, 2023
Funds generally call capital from limited partners (LPs) in several tranches in order to optimize fundraising - it's simply easier if upon admittance to the Fund, an LP only has to wire say, 20% of its full capital commitment rather than 50%.

Sometimes, an LP may wish to send its full capital commitment ahead of time, as "pre-paid" capital, often for convenience. While this is possible, it creates more work administratively and on the banking side to track and silo the pre-paid funds separately - so it's not something to recommend or broadly offer in most cases. 

IMPORTANT: Capital calls will "draw down" on pre-paid capital on the same percentage/schedule as the rest of the LPs. However, any pre-paid funds that have not been called CANNOT be used for any purposes, including deployment. 

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