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Explainers · private equity

The manager's own money in the fund

The GP commitment is the money a manager and its partners invest in their own fund, often a few percent of the total.

What the film says

In private equity, the manager usually invests its own money too. That's the GP commitment. Say a one billion dollar fund has a two percent commitment. That's twenty million of the partners' own money. So why do investors care? They read it as skin in the game. A low one, or an all-borrowed one, can raise questions.

In the glossary: GP commitment

A simple example with round numbers, not advice. Terms vary by fund.

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