Glossary

  • Capital contribution

    One of the two contributions made by each investor to finance a limited partnership (the other being “loan contribution”). As an investor’s liability to third parties as a partner is capped according to its capital contribution, this part of its investment is usually very small.

  • Capital gains

    Short or long-term profits from the sale of assets.

  • Capital under management

    The amount of capital available to a management team for private equity investments.

  • Capital weighted average IRR

    The average IRR weighted by fund size with funds contributing to the average in proportion to their size.

  • Captive fund

    Investment fund partly owned by a larger financial institution.

  • Carried interest

    Also known as "carry". The share of profits from investments made by the fund (generally 20-25%) that the managers receive. Typically, carried interest is only paid after investors receive their original investment back plus a preferred return.

  • Co-investment

    Investment of a fund as a non-leading part in a syndicate.

  • Commitment

    An investor's obligation to provide a certain amount of capital to a fund.

  • Corporate venturing

    Venture capital provided by large corporations to further their own strategic interests.

  • Covenant-lite debt

    Debt with reduced protection to the debt holder.

Full lifecycle diversification with private equity

Unlike other asset classes, private equity enables investors to cover the entire lifecycle of a company or industry.