Final Close

Deadline for the final close

The limited partnership agreement (LPA) limits how long the GP may keep admitting investors after the first close. Market practice is commonly twelve to eighteen months after the initial closing, sometimes extendable with LPAC consent; the model limited partnership agreement of the Institutional Limited Partners Association uses twelve months. The deadline protects early LPs from dilution of their share of the existing portfolio and from an indefinite fundraising distraction. Market data sometimes records a "target close date" set by the GP for planning; it has no legal effect unless the LPA adopts it.

Equalisation at subsequent closes

An investor admitted after the first close must put itself in the position of an original investor. It contributes its pro rata share of all capital previously called (for investments, fees and expenses), and usually pays an additional equalisation charge, often expressed as interest at a fixed annual rate on the catch-up amount, compensating earlier LPs for funding the portfolio before it. Earlier LPs then receive a distribution, usually recallable, reflecting the rebalanced shares. Management fees are typically charged to the later closer from the initial closing. See equalization.

What is fixed at the final close

Total commitments, and therefore fund size (subject to the hard cap), each LP's percentage interest, voting weights and the fee base for commitment-based fees. Side-letter MFN elections are usually offered after the final close, once all side letters are known.

Reading final-close data

A fund "closing above target" or "at its hard cap" indicates demand at the time of fundraising. The time from first to final close is the usual measure of fundraising duration (see fundraising period). Neither says anything about future returns.

Worked example

Examples are illustrative; figures are not market data.

Not the same as

• First Close: The first close starts the fund; the final close ends fundraising.
• Hard Cap: The hard cap limits how much the fund can raise; the final close is when fundraising ends, whether or not the cap is reached.

Common mistakes

• Assuming later closers buy in at NAV. Equalisation in a closed-end fund is normally at cost of earlier calls plus an interest charge, not at current fair value.
• Treating equalisation interest as part of the LP's contributed capital in performance calculations without checking the LPA.
• Assuming no new LP can ever join after the final close; transfers via secondary sale remain possible with GP consent.

Edge cases

• Some LPAs price equalisation at fair value when the portfolio has moved materially, or give the GP discretion to exclude certain investments from equalisation.
• Parallel funds and feeder vehicles usually close on the same timetable and aggregate toward the hard cap.

Sources

1. ILPA Model Limited Partnership Agreement (Whole of Fund and Deal-by-Deal versions). Institutional Limited Partners Association, ILPA, Whole of Fund first released October 2019, updated July 2020; Deal-by-Deal version and term sheet released 22 July 2020. Status: Current (checked 2026-10-01). WOF Sec. 1.1 ('Final Closing Date', 'Remaining Commitment'); Secs. 4.1, 5.1 — supports: Final closing 12 months after the initial closing; subsequent closing partners treated as admitted at the initial closing; equalisation payment plus interest at [8]% a year, the interest not a capital contribution and paid to prior partners; returned contributions restore remaining commitment; maximum fund size includes parallel vehicles
2. ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners. Institutional Limited Partners Association, ILPA, Third edition, released 27 June 2019. Status: Current edition (no 4.0 found as of 2026-10-01) (checked 2026-10-01). p. 41 (glossary: 'Closing (Fund)') — supports: First closing and final closing defined; after the final closing the fund is closed to further subscriptions

• First Close
• Fundraising Period
• Hard Cap
• Oversubscription
• Limited Partner Advisory Committee (LPAC)
• Most Favored Nation (MFN) Clause

• Form D
• Fundraising (Private Fund Fundraising)