Unfunded commitment refers to the portion of a limited partner's capital commitment that has not yet been called by the fund. When investors commit to a fund, they pledge a specific amount of capital but don't transfer the full amount immediately. Instead, the general partner calls capital over time as investment opportunities arise.
How unfunded commitments work
If an investor commits £10 million to a fund and the general partner has called £4 million to date, the unfunded commitment is £6 million. This remains on the investor's balance sheet as a future obligation. Limited partners must maintain sufficient liquidity to meet capital calls, typically with only 10-15 days notice.
Managing unfunded commitments
For fund managers, tracking unfunded commitments is essential for treasury management and investment pacing. ABCapital, a bunch client, previously managed capital calls through fragmented tools including emails and separate virtual data rooms, creating a poor investor experience. As Sam Vermeulen, Senior Associate at ABCapital, notes: "Having everything in one portal means LPs immediately see their tasks and data across funds. It gives them clarity—and gives us comfort." Transparent tracking of unfunded commitments through investor portals helps LPs manage their overall private markets allocation and anticipate funding requirements across their portfolio of fund commitments.
Is uncalled capital a liability?
Uncalled capital is a contractual obligation. Limited partners must fund capital calls under the terms of the Limited Partnership Agreement. It is not always treated as a standard balance sheet liability.
What happens if an LP can’t meet a capital call?
The consequences are defined in the fund’s governing documents. Penalties may include interest charges, dilution, loss of voting rights, or a forced sale of the investor’s interest. The outcome depends on the fund structure and jurisdiction.
