GP
General Partner
The fund manager — sponsors, raises, deploys, and exits the fund. In Indian AIFs, structured as Investment Manager + Sponsor + Trustee triangle.
The General Partner (GP) is the entity that manages an investment fund — sources deals, makes investment decisions, monitors portfolio, drives exits. The term is borrowed from US limited partnership structures; in India, the equivalent function is fulfilled by the Investment Manager (IM) of an AIF, supported by a Sponsor and a Trustee.
The Indian AIF triangle:
- Sponsor — sets up the AIF, takes a 'skin in the game' minimum commitment of 2.5% of fund corpus or ₹5 crore (whichever lower) for Cat I and Cat II AIFs, and 5% or ₹10 crore for Cat III (under SEBI AIF Regulations). The sponsor is typically the GP's parent / promoter entity.
- Investment Manager (IM) — appointed by the AIF (via the trustee) to make investment decisions. The IM is the active 'GP function'. Must satisfy 'fit and proper' criteria; key personnel must have requisite experience.
- Trustee — holds the AIF property in trust for the LPs (if the AIF is structured as a trust, which most Indian AIFs are). Trustee is a SEBI-registered trustee company.
GP economics:
- Management fee: typically 2% per annum on committed (during commitment period) and on invested or NAV thereafter.
- Carried interest: typically 20% of profits above the 8% hurdle (preferred return). See Carried Interest.
- Set-up costs and fund expenses capped per the PPM.
GP fiduciary duties:
- Act in the best interest of investors
- Avoid conflicts of interest (related-party investments require specific disclosure and LPAC approval)
- Follow the investment strategy and restrictions disclosed in the PPM
- Comply with SEBI's reporting and disclosure regime
- Maintain books and records, conduct audits, and circulate quarterly investor reports
LPAC (Limited Partner Advisory Committee):
A committee of select LPs that the GP consults on conflicts, key-person events, valuation overrides, and material changes. SEBI has progressively reinforced the LPAC's role.
Trends in Indian PE / VC:
- Carry unitisation (paid via fund units, not cash) per recent SEBI guidance
- GP commitments rising from minimum 2.5% to 5–10% for new managers (LP-driven)
- GIFT City IFSC structures for global LPs offering favourable tax
Fund investor providing capital. In Indian AIFs, structurally a 'Contributor' under the Indian Trusts Act framework — ₹1 crore minimum commitment.
SEBI's three-tier classification of pooled investment vehicles in India. Determines tax pass-through, leverage limits, and permitted investments.
GP's performance share of fund profits, typically 20% above an 8% preferred return hurdle. Recent SEBI rules tighten attribution and disclosure.
Formal notice from a fund's GP to its LPs to fund a portion of their committed capital. Indian AIFs typically issue drawdowns 10–15 business days in advance.
Order in which fund proceeds flow to LPs and GPs. Two main structures: European (fund-as-a-whole) and American (deal-by-deal). Indian AIFs lean European.