A parallel fund invests alongside the main fund on the same terms and at the same time, usually for investors with legal or tax needs the main fund cannot meet. Each deal is split in proportion to commitments.
What the film says
In private equity, one deal can be bought by two funds, an ocean apart. It's called a parallel fund. Say a manager raises a main fund in the U.S. One billion dollars. But some investors in Europe need a different structure. So it raises a second fund, there. Two hundred million. Now a deal comes up. Say it needs one hundred and twenty million. The split follows the commitments. The main fund pays one hundred. The parallel fund pays twenty. Same deal. Same day. Same terms, usually. A feeder invests through the main fund. But a parallel fund invests right beside it. So why do investors care? One strategy can take investors from different places, without changing how deals get done. Two funds. One set of deals.
In the glossary: Parallel fund
A simple example with round numbers, not advice. Terms vary by fund.
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