Glossary
Commitment
Commitment refers to the legally binding capital pledge made by an investor to a Private Markets fund. The committed capital is not transferred immediately but is drawn down by the General Partner as needed through Capital Calls. The obligation is legally enforceable.
At a glance
- A Commitment obligates the investor to provide capital on request from the fund manager.
- The term of the Commitment typically extends across the full fund life, often eight to twelve years.
Frequently asked questions
Fund documentation typically provides for significant penalties, including the forfeiture of interests or default interest charges. A Commitment should therefore only be made if long-term liquidity is secured. Investors should conduct careful liquidity planning before subscribing.
Part of the topic
Private Markets
This entry is for general information purposes only and does not constitute investment, legal or tax advice. It is a simplified summary of the legal position and tax treatment.