{"concept_id":"ALTSS-LIFE-009","slug":"final-close","canonical_name":"Final Close","aliases":["final closing"],"kind":"term","authority":"industry","facets":["LIF","FRI"],"domains":["FUNDRAISING"],"display_title":"Final Close","search_aliases":["what is a final close","final close private equity","final close deadline","equalization payment final close","subsequent close meaning","target close date"],"one_sentence_definition":"The final close is the last date on which a fund admits new investors or accepts increased commitments, after which total commitments are fixed and later entrants can join only by acquiring existing interests.","plain_english":"After the final close the fund stops fundraising. Its size is set, and investors who came in after the first close have paid an equalisation amount so that everyone stands as if they had committed on day one.","parent_concepts":[],"child_concepts":[],"related_concepts":["equalization","first-close","fundraising-period","hard-cap","target-fund-size","oversubscription","lpac","most-favored-nation-mfn"],"comparison_concepts":[],"not_the_same_as":[{"slug":"first-close","distinction":"The first close starts the fund; the final close ends fundraising."},{"slug":"hard-cap","distinction":"The hard cap limits how much the fund can raise; the final close is when fundraising ends, whether or not the cap is reached."}],"formula_ids":[],"worked_examples":[{"title":"Illustrative equalisation interest for a later closer","paragraphs":["A fund has called 20% of commitments when a new LP commits $30m at a subsequent close, 270 days after the first capital call. The LP pays $6m (20% of $30m) to catch up on earlier calls plus equalisation interest at an 8% annual rate for 270 days, about **$0.36m**. The catch-up contribution counts against its commitment; the interest usually does not and is paid to the earlier LPs."],"calc":{"fn":"equalization_interest","inputs":{"amount_catch_up":6,"rate":0.08,"days":270},"expected":{"equalization_interest":0.3551},"tol":0.0005}}],"sections":[{"heading":"Deadline for the final close","paragraphs":["The limited partnership agreement (LPA) limits how long the GP may keep admitting investors after the [first close](/glossary/first-close). Market practice is commonly twelve to eighteen months after the initial closing, sometimes extendable with [LPAC](/glossary/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."]},{"heading":"Equalisation at subsequent closes","paragraphs":["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](/glossary/equalization)."]},{"heading":"What is fixed at the final close","paragraphs":["Total commitments, and therefore fund size (subject to the [hard cap](/glossary/hard-cap)), each LP's percentage interest, voting weights and the fee base for commitment-based fees. Side-letter [MFN](/glossary/most-favored-nation-mfn) elections are usually offered after the final close, once all side letters are known."]},{"heading":"Reading final-close data","paragraphs":["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](/glossary/fundraising-period)). Neither says anything about future returns."]}],"classification_rules":[],"calculation_rules":[],"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."],"external_standard_mappings":[],"source_ids":["SRC-ILPA-MODEL-LPA","SRC-ILPA-PRINCIPLES-3"],"citations":[{"source_id":"SRC-ILPA-MODEL-LPA","pinpoint":"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","source":{"source_id":"SRC-ILPA-MODEL-LPA","title":"ILPA Model Limited Partnership Agreement (Whole of Fund and Deal-by-Deal versions)","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"template","url":"https://ilpa.org/industry-guidance/templates-standards-model-documents/model-limited-partnership-agreement/","year":2020,"publication_date":"Whole of Fund first released October 2019, updated July 2020; Deal-by-Deal version and term sheet released 22 July 2020","jurisdiction":"intl","status":"Current","last_verified":"2026-10-01"}},{"source_id":"SRC-ILPA-PRINCIPLES-3","pinpoint":"p. 41 (glossary: 'Closing (Fund)')","supports":"First closing and final closing defined; after the final closing the fund is closed to further subscriptions","source":{"source_id":"SRC-ILPA-PRINCIPLES-3","title":"ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"guidance","url":"https://ilpa.org/wp-content/uploads/2019/06/ILPA-Principles-3.0_2019.pdf","year":2019,"publication_date":"Third edition, released 27 June 2019","jurisdiction":"intl","status":"Current edition (no 4.0 found as of 2026-10-01)","last_verified":"2026-10-01"}}],"faq":[],"seo":{},"first_published":"2026-01-01","last_reviewed":"2026-10-01","last_modified":"2026-10-01","content_version":"2.0.0","url":"https://altss.com/glossary/final-close","json_url":"https://altss.com/reference/concepts/final-close.json","title":"Final Close","formulas":[],"sources":[{"source_id":"SRC-ILPA-MODEL-LPA","title":"ILPA Model Limited Partnership Agreement (Whole of Fund and Deal-by-Deal versions)","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"template","url":"https://ilpa.org/industry-guidance/templates-standards-model-documents/model-limited-partnership-agreement/","year":2020,"publication_date":"Whole of Fund first released October 2019, updated July 2020; Deal-by-Deal version and term sheet released 22 July 2020","jurisdiction":"intl","status":"Current","last_verified":"2026-10-01"},{"source_id":"SRC-ILPA-PRINCIPLES-3","title":"ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"guidance","url":"https://ilpa.org/wp-content/uploads/2019/06/ILPA-Principles-3.0_2019.pdf","year":2019,"publication_date":"Third edition, released 27 June 2019","jurisdiction":"intl","status":"Current edition (no 4.0 found as of 2026-10-01)","last_verified":"2026-10-01"}]}