Market Participants
Limited Partner
LP
An investor who commits capital to a private equity fund but has limited involvement in management.
Limited Partners (LPs) are the investors who provide capital to private equity funds. They have limited liability (risking only their investment) and limited involvement in investment decisions.
Types of LPs
- Pension funds: Largest LP category globally
- Endowments and foundations: Universities, charitable organizations
- Sovereign wealth funds: Government investment vehicles
- Insurance companies: Seeking long-term returns
- Family offices: Wealthy families and individuals
- Fund of funds: Vehicles that invest in multiple PE funds
LP rights
- Receive quarterly/annual reports
- Attend annual meetings
- Limited voting rights on key decisions
- No involvement in investment decisions
LP due diligence
- Before committing, LPs evaluate:
- Track record of the GP
- Investment strategy and thesis
- Terms and fee structure
- Team stability and succession
Example
CalPERS is one of the world's largest LPs, with over $50 billion committed to private equity across hundreds of fund relationships.