A subscription line is a loan a fund takes against what investors have promised. Cash gets called later, so the clock on IRR starts later. The IRR can go up. The profit doesn't. Simple example, before interest. Terms vary by fund.
What the film says
In private equity, a fund can buy a company before investors send a dollar. It borrows the money first. That loan is called a subscription line. Investors have promised the fund a set amount. That promise is called a commitment. A bank will lend against those promises. So when a deal comes up, the fund draws on the line, the bank's cash goes out, and the deal closes. Months later, the manager calls the money from investors. It flows in, and the bank gets repaid, with interest. Why does that matter to investors? Because IRR, the yearly return, counts from when the cash goes in. Say a hundred million becomes two hundred, three years after the deal. Called on day one, that's twenty-six percent a year. Called six months later, it's thirty-two. Same deal, and the same profit, before that interest. The multiple stays at two times. That's why many investors ask to see IRR both ways, with the line and without it. A subscription line can lift the IRR. It doesn't add profit. IN PRIVATE EQUITY,
In the glossary: Subscription line
A simple example with round numbers, not advice. Terms vary by fund.
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