I think the below means that first we need to return the $25M to LPs, before we can recycle? “After a Limited Partner has received cumulative distributions equal to the sum of the aggregate capital Contributions made to the Fund by such Limited Partner, the then-current amount of a Limited Partner’s Unused Capital Commitment shall be increased by an amount equal to the Recycled Amount.”
2 answers
The recycling provision does not refer to the Fund's target size.
The recycling language in the Cornerstone LPA template means that:
The recycling language in the Cornerstone LPA template means that:
- After a limited partner receives distributions equal to its total capital contributions (not commitment) to the Fund;
- The limited partner's "Unused Capital Commitment" (amount available to be called and deployed) will be increased by an amount up to the Recycled Amount.
For example:
- A limited partner commits a total of $X to the Fund, which has Y% as the Recycled Amount;
- Total capital called is 50% after a few years;
- The limited partner's Unused Capital Commitment is now 50%;
- There is an exit/distribution that returns 100% of the limited partner's capital contribution;
- The limited partner's Unused Capital Commitment can be increased by up to Y% of the total commitment.
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