A limited partnership agreement
- Exists between a Limited Partner (LP) and a General Partner (GP)
- Forms a private equity fund with the purpose is to invest in companies
- Companies received investment from the fund becomes its portfolio companies
LP: institutional and individual investors (discussed in video#3)
- Has limited liability
- Only gives partial capital upfront
- Commits to giving all capital over the length of the fund (7~10 years)
- Can exit from the commitment anytime through a secondary market
GP: private equity firm (discussed in video#5)
- Has unlimited liability
- Finds and manages investment
- Calls LP for additional capital when new investment opportunities come
Resource for further information regarding LP agreements: The ILPA (Institutional Limited Partners Association) website