Asset management and funds
General partner (GP)
The firm that raises and runs a private equity or venture fund.
Last reviewedWhat does General partner (GP) mean?
The general partner is the investment firm that manages a private fund: it raises the money, picks the deals, oversees the companies it buys and decides when to sell. Investors in the fund are limited partners. The GP usually earns a yearly management fee, often around 2 percent of committed capital during the investment period, plus carried interest, a share of the profits. It also puts in some of its own money so that its interests line up with investors. Example: a GP raising a 1 billion fund with a 2 percent fee earns 20 million a year to pay its team and costs.
Where does it come up in case interview prep?
- How private equity and venture capital funds workLesson in Private equity and venture capital
- LBO returns and fund economicsLesson in Private equity and venture capital
- Private equity and venture capital: players, trends, regulation, and how to crack the casesLesson in Private equity and venture capital
Related terms
- Limited partner (LP)An investor that puts money into a private equity or venture fund.
- Carried interest (carry)The general partner's share of a fund's profits, usually 20 percent.
- Hurdle rateThe minimum return a project or fund must beat before it counts as worth doing.
- Dry powderMoney investors have committed to funds but that has not yet been invested.
- Assets under management (AUM)The total market value of the money a firm manages for clients.
- Net flows (net new money)New client money coming in minus money taken out.
- Active versus passive investingTrying to beat the market versus simply tracking it at low cost.
- Sovereign wealth fund (SWF)A state-owned investment fund, often built from oil revenues or reserves.