Exit Recycling

Optional section if your fund supports future exit proceeds to be re-invested back into new investments.

Turning on the Exit Recycling provision.

Enter the following information:

  • What percentage of exit proceeds can be recycled each period? (%): This is typically 100%

  • What is the most the fund can recycle in total? (as a % of committed capital): The max amount of exit proceeds that can be recycled. Expressed as a multiple of committed capital. For example: a 50% cap implies the fund can recycle up to half its committed capital from exit proceeds.

  • The term of the recycling: i.e. over what timeframe can the fund recycle exit proceeds?

  • Allow fund to recycle future exit proceeds ahead of time: If this is checked, the fund will aggressively make new investments in initial years in anticipation of future exits. If this is unchecked, the fund will wait for exits to occur before recycling can begin.

What is the difference between Exit Recycling and Management Fee Recycling?

Both Management Fee and Exit Recycling will recycle exit proceeds into new or follow-on investments. The only difference between both these methods is the cap up to which the exits can be recycled.

  • Management fee recycling means the fund can recycle exit proceeds up to the level of management fees earned to date.

  • Exit proceeds recycling means, the fund can recycle exit proceeds until a certain cap of committed capital is reached. This cap is typically expressed as a % of committed capital

  • A fund could exercise both these provisions in their LPA, if they choose to.

Last updated