The bunch glossary

AUM (Assets Under Management)

The total market value of the investments managed by a financial institution or individual.

Anchor Investor

A major early investor whose large commitment helps launch a fund and attract additional investors.

Business Process Outsourcing (BPO)

The practice of outsourcing specific business functions to external service providers.

Capital Call/Drawdown

A request by a fund manager for investors to transfer a portion of their committed capital to the fund for investment purposes.

Carried Interest (Carry)

The share of profits from an investment fund that is paid to the fund's manager, typically a percentage of the fund's total returns.

Catch-up

A waterfall provision that allocates most distributions to the GP after the preferred return is met.

Continuation Fund

A new investment vehicle that acquires assets from an existing fund to extend holding periods.

DPI (Distributions to Paid-In Capital)

A performance metric showing how much cash a fund has returned to investors relative to the capital they contributed.

Distributions

Payments made by a fund to its investors, typically resulting from realized gains on investments or income generated by portfolio companies.

Equalisation

A process that adjusts costs and returns so investors joining at different times participate on equal terms.

Fair Value Accounting

An accounting method that measures assets and liabilities at their current market value rather than historical cost.

Final Close

The point when a fund’s fundraising ends and no further investor commitments are accepted.

First Close

The initial stage of fundraising when a fund accepts its first investor commitments and begins operations.

Fund

A pooled investment vehicle that raises capital from multiple investors to invest in a diversified portfolio of assets, typically managed by a professional investment manager.

Fund Administration

The operational function that manages accounting, reporting, compliance and investor services for a fund.

Fund Intelligence

A data-driven approach that turns fund operations into real-time insights for decision-making and investor reporting.

Fund of Funds

An investment fund that invests in a diversified portfolio of other funds, rather than directly in individual securities or assets.

GP (General Partner)

The individual or group responsible for managing and making investment decisions for a private equity or venture capital fund.

GP/Lead Commitment

The amount of personal capital that a general partner commits to invest in a private equity or venture capital fund.

Hard Cap

The maximum amount of capital a fund will accept from investors.

Hurdle Rate

A minimum rate of return that must be achieved before a fund manager is entitled to a share of the profits.

Internal Rate of Return (IRR)

A metric used to measure the profitability of an investment, calculated as the discount rate that equates the present value of future cash flows with the initial investment.

LP (Limited Partner) / (Co-)Investor

Limited partners are investors who provide capital to a private equity or venture capital fund in exchange for a share of the profits.

LPA (Limited Partnership Agreement)

The legal contract defining the terms, structure and governance of a private fund between the general partner and investors.

Leveraged Buyout (LBO)

An acquisition strategy that uses significant borrowed money to purchase a company.

Liquidation Preference

The priority of payment in the event of a sale or liquidation of a company, often granted to preferred stockholders over common stockholders.

Liquidity

The ability to convert an investment into cash or cash equivalents with minimal impact on the market price.

Local GAAP (Generally Accepted Accounting Principles)

Accounting standards established within a specific country that govern statutory financial reporting and regulatory compliance.

Management Fee

The fee paid to a private equity or venture capital fund's management company for managing the fund's investments, typically calculated as a percentage of the fund's assets under management.

Net Asset Value (NAV)

The value of a fund’s assets minus liabilities, expressed per share or unit.

Over Commitment

A strategy where investors commit more capital to funds than they could fund at once, assuming calls will be staggered over time.

PE (Private Equity)

An asset class that involves investing in private companies or assets that are not publicly traded, typically with the goal of achieving long-term capital appreciation.

Preferred Return

The minimum return investors must receive before a fund manager can earn performance fees.

SPV (Special Purpose Vehicle)

A legal entity created for a specific purpose, such as holding a single asset or investment.

Secondary Market

A market for buying and selling existing securities or assets, rather than newly issued ones.

Secondary Transaction

The buying or selling of an existing investment, rather than making a new investment.

Side Letters

Agreements between a fund manager and one or more investors that modify the terms or conditions of the fund's offering documents.

Soft Cap

A fundraising target a fund aims to reach, with flexibility to raise more capital up to a hard cap.

Total Commitment

The total amount of capital committed by investors to a private equity or venture capital fund.

Unfunded Commitment

The portion of an investor’s committed capital that has not yet been called by the fund.