General Partner in Private Equity

Updated on April 4, 2024
Article byKartik Sharma
Edited byKartik Sharma
Reviewed byDheeraj Vaidya, CFA, FRM

Who are General Partners?

A private equity fund that is created needs to be managed. A general partner (GP) refers to the private equity firmPrivate Equity FirmPrivate equity firms are investment managers who invest in many corporations' private equities using various strategies such as leveraged buyouts, growth capital, and venture capital. The top private equity firms include Apollo Global Management LLC, Blackstone Group LP, Carlyle Group, and KKR & Company more responsible for managing a private equity fund. The private equityThe Private EquityPrivate equity (PE) refers to a financing approach where companies acquire funds from firms or accredited investors instead of stock marketsread more firm acts as a GP, and the external investors are LPs.

The investors who have invested in the fund would be known as Limited Partners (LP), and the PE firm would be known as General Partner (GP).

LP GP Fund Structure

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: General Partner in Private Equity (

What is the Role of a General Partner?

General Partners GP


The general partner is responsible for making all decisions related to the management of the private equity fund. In addition, there are other specific functions that the general partner carries out. For instance, a General Partner must manage the private equity fund’s portfolio, consisting of all funds invested by LPs.

In simple terms, the General Partner is responsible for the private equity fund’s administration, management, and operation.

PE firms function and operate under the guidance of a general partner who sources capital from various investors and manages the fund by investing in this capital.

  • Hence, first in the order of responsibility is to raise funds, followed by administering the day-to-day operations of the private equity fund. These day-to-day operations include identifying the investment opportunities, maximizing the value of the investment, and liquidating investments so that distributions can be made to LPs.
  • The main objective of the GPs is to manage the private equity fund for the benefit of the LPs that have invested in it and act in the interest of the LPs.
  • Given that LPs commit their funds to private equity firms and expect a positive return on their investments, the GP is entrusted with managing their funds to meet this objective.
  • Additionally, unlike LPs, the GPs have legal liability for the actions carried out by the fund.

Financial Modeling & Valuation Courses Bundle (25+ Hours Video Series)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

Compensation of General Partner

Managment Fees LP GP


To get a better understanding, let us look at an example.

Let us say that a particular fund and its assets earn a return of 100 billion US dollars. The management fee received by the GP would then amount to 2 billion. Similarly, if the return on investment is 50 billion, the carried interest would be 20% of 50 billion in return on investment.

General Partner in Private Equity Video

This article has been a guide to the General Partners in Private Equity, the role of General Partners, and the compensation structure, including the management fees and carried interests. You may have a look at these articles below to learn more about Private Equity –