Future liability for capital expenditure in respect of which contract have been made. A Capital Commitment, Committed Capital or simply Commitment, is the agreed capital a

General Partner General partner is a person who joins with at least one other person to form a business. A general partner has responsibility for the actions of the business, can legally bind the business and is personally liable for all the partnership's debts an ...

can request (or draw down) from a Limited Partner. When an investor buys into a

Private equity fund A private equity fund (abbreviated as PE fund) is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity ...

, the agreement specifies the total amount the investor ''commit'' to the fund. This amount is not requested initially from the Investor, but can be drawn down on request by the

. When the

decides to invest in a portfolio company, it will

call Call or Calls may refer to: Arts, entertainment, and media Games * Call, a type of betting in poker * Call, in the game of contract bridge, a bid, pass, double, or redouble in the bidding stage Music and dance * Call (band), from Lahore, Paki ...

, or drawn down some of the commitment. Over the life of the partnership, the General Partner is not obligated to call the full commitment amount, but cannot call more than what has been committed. If the General Partner does not call the full committed amount, the remainder is called the unfunded commitment. The commitment amount is part of the Limited Partnership Agreement signed between the Limited Partners and the General Partner. Some clauses of the LPA can refer to the commitment amount, such as: * The LPA can request an initial contribution, in percentage of the commitment * The Management fees can be computed in percentage of the commitment, or in percentage of the unfunded commitment * Most LPAs include a minimum commitment amount

References

Private equity Venture capital {{private-equity-stub