In practice
Parallel funds are usually set up as separate partnerships under their own LPA, typically mirroring the main fund’s economic terms. They often arise in Europe or for tax-exempt, sovereign or regulated investors. Not to be confused with a feeder fund, which invests through the main fund rather than directly in deals. Parallel funds typically share expenses and exit alongside the main fund.
An example
Round numbers, not a real fundSay a manager raises a $1 billion main fund and a $200 million parallel fund for investors needing a different structure. Each deal is split between them in proportion to commitments.
Why it matters
It lets one strategy accept investors from different jurisdictions without changing how deals are done.
A definition, not advice; where usage varies the entry says so. Something wrong? Tell the desk.