Subscription Line (Capital Call Facility)
A subscription line is a credit facility a fund uses to finance investments temporarily before calling capital from LPs.
Definition
A subscription line (or capital call facility) is a loan secured by LP commitments, used by funds to bridge capital calls. The fund borrows to close deals quickly, then repays the facility with later capital calls. Subscription lines can affect cash flow timing and performance metrics, especially IRR. Allocator Context Allocators assess subscription lines in terms of cost, usage policy, duration, and transparency. Moderate use can improve operational flexibility; extended use can mask true cash flow timing and inflate IRR. Institutions often request detailed reporting on facility usage. Decision Authority Subscription line usage is governed by fund documents and may be reviewed during diligence. Some allocators have internal limits on acceptable subscription line usage and require committee awareness when IRR is materially impacted. Why It Matters for Fundraising Managers should disclose facility policy clearly, including typical duration, maximum usage, and how performance metrics are calculated. Lack of clarity here can trigger legal and IC delays. Key Takeaways Changes timing of capital calls and cash flows Can inflate IRR without changing ultimate value Transparency and limits matter to LPs Often a diligence focal point for institutions