Did you know? General Partners (GPs) notices are among the most frequent yet undervalued communications in private market funds. For Limited Partners (LPs), managing these notices effectively is critical to maintaining compliance, optimising portfolio decisions, and strengthening GP relationships.
In this guide, we’ll break down the essentials of GP notices - from their structure and purpose to how you can overcome common challenges. Whether you’re part of the investments, operations, or accounting team, this blog will equip you with the insights you need to streamline your processes and make data-driven decisions.
One of the distinctive features of private market funds is the way capital moves in and out of the fund. LPs commit capital upfront, but GPs draw down this capital gradually over several years, depending on the pace of investments. Likewise, GPs return capital to LPs in multiple instalments as they liquidate investments. In essence, GPs call capital and distribute proceeds as needed, rather than following a fixed schedule.
Notices are the formal document through which GPs communicate to LPs when and how much capital needs to be contributed or distributed, and generally fall into two main categories: call notices and distribution notices.
Through call notices, General Partners (GPs) request Limited Partners (LPs) to contribute capital for purposes such as:
Most calls occur during the first five years of a fund’s life, known as the “investment period,” to finance new investments. However, calls may still be issued during the second half of a fund’s life to fund follow-on investments. Also, at any point in the fund's life, calls are made to cover management fees and expenses.
Capital calls typically reduce the unfunded commitment. For example, if your unfunded commitment is $1,000,000 and you receive a call for $200,000, the updated unfunded commitment is generally reduced to $800,000. An exception to this occurs with calls classified as “out of commitment.” In general, the notice will usually specify the impact on the unfunded commitment and highlight whether the call should be treated as "in" or "out" of commitment.
Via distribution notices, GPs instead notify LPs of payments directed to them. These may due to:
For example, imagine a GP successfully exits an investment, generating proceeds. You receive a distribution notice stating you will receive $150,000 as your pro-rata share of proceeds: $100,000 as return of capital, and $50,000 as realized gain. This distribution reduces your invested capital by $100,000, returning a portion of your original commitment, while the $50,000 realized gain represents profit earned from the investment.
For buyout and venture capital funds, distributions usually start only in the second half of a fund’s life (the “harvesting phase”) as the bulk of distributions comes from the sale of portfolio companies. For income-generating strategies such as Private Debt, you can expect to receive distribution notices from year 1.
Distributions generally do not impact unfunded commitments. However, if a distribution is classified as "recallable" under the fund's limited partnership agreement (LPA), it increases the LP's unfunded commitments, effectively raising the amount of money that can be called by the GP in the future.
There are instances where GPs may issue a single notice that combines both call and distribution components. For example, this could happen when proceeds from a company sale are distributed to LPs while simultaneously calling for funds to cover management fees. In such cases, the GP issues a single notice and offsets the call and distribution amounts. The end result can be either a “net call” or “net distribution”, depending on which component outweighs the other.
What information do you actually find in a notice? GP notices contain critical details that LPs need to review carefully. Here are the key elements to look for:
Not all notices will include every element listed here, but these are useful details to keep in mind when reviewing one.
Here is an example following the standards set by the Institutional Limited Partners Association (ILPA):
Before diving into the specifics of which notice information LPs should prioritise, it’s important to understand how these documents are processed and used by various stakeholders within an LP organisation.
While every LP structure is unique, they typically consist of three key teams with distinct roles:
Investments Team
The main focus of the investment team is to evaluate new investments and monitor existing ones. As a consequence, their primary interest for notices is about the transactions that may cause the call or distribution:
Essentially, they treat the notice as a "live signal" of investment activity, helping to confirm or refine their understanding of the GP's strategy. For them, the most valuable part of the notice is the narrative surrounding the transaction and components of calls and distributions.
Operations Team
The operations team is normally responsible with actioning the information contained in the notice:
As a consequence, the team will mostly focus on payable dates, net amounts, and GP bank account details.
Accounting Team
Last but not least, the accounting team is usually tasked with maintaining an accurate picture of financials. Key tasks include:
To this end, the team will be particularly attentive to the breakdown of calls and distributions into individual components, and to the impact on unfunded commitments and overall financial metrics.
By understanding how each team utilizes GP notices, LPs can better streamline processes and ensure that all relevant data is extracted.
Here is a summary of which fields are likely to be used by LP stakeholders:
To meet your organisation’s needs effectively, it is essential to define a clear strategy for data collection. This involves addressing three key questions:
Managing General Partner (GP) notices can be overwhelming, especially for Limited Partners (LPs) with investments across multiple funds. Extracting, categorising, and tracking notice data demands significant time and resources. Tamarix addresses these challenges by offering AI-driven solutions that save 100s of hours each month:
By leveraging Tamarix, LPs can streamline workflows, reduce manual errors, and gain a comprehensive understanding of their investment portfolios.
GP notices play a crucial role in LP fund management, serving as a key communication channel between GPs and investors. By understanding the purpose of these notices, familiarising yourself with their structure, and addressing common challenges, you can streamline notice management and make more informed investment decisions.
Ready to take control of your GP notices?