Glossary · Fundraising

What is a final close?

A final close is when a fund stops accepting new investors. Its commitments are locked and its size is set.

In practice

The LPA sets a deadline, typically 12 to 18 months after the first close, and the GP may extend it with LPAC consent. Investors admitted after the first close usually pay a catch-up of management fees back to that date, plus interest. The close is also capped by the fund’s hard cap, if there is one. It is not the end of the investment period.

An example

Round numbers, not a real fund

Say a fund held a first close at $800 million, then added investors until a final close at $2.1 billion. After that, no one else can join.

Why it matters

It is the number the fund is judged by, and where a fund counts in league tables.

In the news

Related terms

First closeA first close is the first time a fund accepts investors’ commitments and gets going, even though it keeps raising money toward its full target.
Hard capA hard cap is the most a fund’s documents allow it to raise. The manager cannot accept commitments beyond it without changing the terms.
EqualizationIn a private fund, equalization is the true-up for investors joining at a later close: they pay as if they had joined at the first, plus interest.
LPAThe limited partnership agreement, or LPA, is a private fund’s main contract. It sets the fees, carry, investment limits and the rights of the manager and the investors.
Investment periodThe investment period is the first years of a fund, often about five, when the manager can make new investments. Afterward it mostly manages and sells what it holds.

The terms, in the news each morning.

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