Permian | Fund Structure
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Fund Structure


These terms are explained from a general financial point of view, but also with a more particular relationship to the private equity fund industry.


The term refers to the situation when two or more investors are sharing ownership of an investment.


The reason for undertaking a co-investment may be one of necessity. A fund or an investor may have limited resources or may for reasons of building a diversified portfolio not want to undertake the full investment. Using one or more co-investors reduces exposure and makes it possible to take a part of a transaction which would otherwise be out of reach.


Large fund investors may also negotiate the right to be offered co-investment opportunities during the investment period of a fund. The amount of funds they can invest as a co-investment and not as part of the fund, will normally be without- or with low fees, and participating in a co-investment allows them to employ capital without large fees and carried interest on high returns. The fees averaged over the fund commitment and the co-investments entered into as a result of participating in the fund, will be lower than on the fund commitment only.

Evergreen fund

An evergreen fund is not limited in time. It does not have a due date by which the investments must be terminated, following which the fund is also terminated and operation seize. Evergreen funds may be listed, in which case an exit is meant to always be possible – it may be constrained by low liquidity in the share. Unlisted evergreens normally have a periodic right of redemption and subscription.

Feeder Fund

An entity established to collect a number of investors who pools their resources in a common investment vehicle.


Feeder funds will often be established for smaller investors who may make a larger investment from a common vehicle than would otherwise be possible. The most successful fund managers tend to operate funds with high minimum commitments which makes it impossible for many private investors to participate alone.


Feeder funds may also be established in order to collect investors of a certain nationality who for reasons of regulation and law may benefit from being investors in a larger vehicle.

General Partner (GP)- Norsk: Hovedmann, komplementar

The General Partner of the partnership is responsible over and beyond his Commitment and makes all decisions on behalf of the partnership. The General Partner normally makes the investment decisions on behalf of the partnership, coordinates its operation and is responsible for compliance and risk management.


See “Limited Partner (LP) – Norsk: Stille deltaker”

Investment Advisor

The Investment Advisor is appointed by the General Partner to the fund. The advisor will not be able to make any decisions on behalf of the fund but will find, evaluate and propose for the fund to make investments and thereafter advice on how to manage and at the end of the day how to realise the investment.

Investor Committee

An Investor Committee is made up by a representative group of the Limited Partners who have invested in the fund. Their mandate is not to make decisions on investments, on the contrary, the LPA tends to be quite adamant that giving input on investment decisions is outside the scope of the IC. That is after all, what the investors pay the GP and the advisor to do.


The IC is normally given a more comprehensive report on the operation of the fund than the other participants.


The IC is consulted on conflict of interest issues should such arise and other issues where the GP wants to consult with representatives of the investors in order to secure a good solution on a particular issue.


The operation of the Investor Committee is described in the LPA which will stipulate some situations where the IC will have to meet and make decisions. One such issue is following a keyman event, whether or not to accept the proposal for a replacement(s).


The Investor Committee is working for all investors and is charged with promoting the interests of all.

Limited Partner (LP) - Norsk: Stille deltaker, Kommandittist

A limited partner in a partnership is in Norway also referred to as a “silent partner” which is a quite fitting description. The limited partner will fund the partnership in accordance with the terms of the LPA and up to the amount of his Commitment, but will not in any way participate in the operation of the fund. The liability of the Limited Partner is capped at his Commitment to the partnership.


It is common in a number of jurisdictions that the Limited Partners’ identity will remain hidden from the public at large, and quite often only the General Partner will know the identity of all Limited Partners.

Parallel Structure / -Funds

The term refers to one or several additional legal structures acting in parallel and on substantially the same terms and conditions as the main- or original structure. Parallel funds will normally make exactly the same investments, in proportion to their size, as the main funds and other parallel funds.


As with Feeder funds, the reasons for setting up parallel structures will normally be to group investors with the same obligations, typically they may be from the same legal jurisdiction and subject to certain regulation which requires them to undertake investments in a particular way or which makes them subject to certain reporting or tax regulations.


Investors may also invest through parallel structures because they share the same investment restrictions and will not be able to participate in all the investments a fund may undertake. A fund with a world-wide investment mandate for example, may have a parallel structure for investors who wants to invest with the fund but which can not accept exposure to Asia. The parallel fund then will participate pro rata in all investments the main fund undertakes, except for those made in Asian companies.


The term refers to a form of legal entity in which there is typically an underlying agreement which states the rights and obligations of the partners or partner groups. Investment funds are often established as partnerships with a General Partner undertaking the day-to-day operation of the fund and having unlimited responsibility for the obligations of the fund, and passive Limited Partners who are only exposed for the amount of their commitment.


As different partners have different roles and since the success of the Partnership is subject to all partners making their individual contributions as planned, transferring ownership is normally regulated. Often transfer requires the consent of the General Partner who should only consent having established that the new owner will be able to undertake all the obligations of the Limited Partner wishing to sell.


The General Partner itself is normally subject to severe financial penalties should it wish to withdraw from the Partnership, and withdrawing also requiring the consent of a large majority of limited partners. Depending on how and where the fund is set up and also upon the jurisdiction of investors, the withdrawal of the general partner may change the status of the limited partnership and may also have tax consequences in investors’ home jurisdiction.


Any new partner must sign onto the Limited Partnership Agreement.


Due to the administrative work and due diligence related to accepting a new Limited Partner, making the change normally incurs a EUR 2500- 5000 fee in order to cover the fund’s cost of transfer.

Top-up Fund

A fund with a fixed commitment of capital may for various reasons run out of funding before the fund manager is able to- or willing to sell an investment. At the same time, the fund raising period of the fund is over and there may also be other obstacles to obtaining funding. The Limited Partnership Agreement may not allow leverage, banks may not want to provide funding and so forth.


A Top-up may be set up to provide those existing investors wanting to provide funding, as well as new investors, the opportunity to provide “top-up” financing. It may be structured in a number of ways, depending sometimes on the wording of the LPA and the strength of the investors in the Top-up fund relative to the investors of the original fund.