Capital Call

A capital call (also drawdown or capital drawdown notice) is the GP's formal request to LPs to wire a portion of their commitment into the fund's bank account, usually to fund a specific investment, management fee, or expense.

Why fund commitments are not paid upfront:

AIFs (especially Cat I and Cat II) collect commitments at closings but call capital on a 'just-in-time' basis to maximize LP IRR. Idle capital in the fund drags returns.

Typical Indian AIF drawdown mechanics:

• Notice period: 10–15 business days between drawdown notice and the payment due date, per the Contribution Agreement (CA) and Private Placement Memorandum (PPM).
• Notice contents: drawdown number, amount being called per LP (pro-rata to commitment), use of proceeds (investment / fee / expense), running tally of called vs uncalled, bank account details.
• Payment rails: RTGS or NEFT to the fund's designated escrow / collection account, KYC-verified.
• Default consequences: a defaulting LP typically forfeits a portion (often 25–50%) of its prior contributions, loses voting rights, and is excluded from subsequent investments. These are heavy and are negotiated in the CA.

Indian-context notes:

• AIF Regulations require a minimum LP commitment of ₹1 crore (₹25 lakh for Angel Funds), but the first drawdown is typically only 5–10% at first close.
• The 'PPM-disclosed drawdown schedule' is regulatory: SEBI mandates disclosure of expected pace of deployment in the PPM. Material deviation requires investor consent.
• Recycling provisions (re-calling distributed capital) and bridge facilities (short-term debt to delay calls) are increasingly common in Indian PE.

Kapitalyze's Fund OS auto-generates drawdown notices, tracks LP wire reconciliation, and updates each LP's contributed vs uncalled balance in real time.