nitinsiwach
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- Jun 18, 2026
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In the total return method where carried interest can only be paid once the entire committed capital paid to the LPs, How does it happen?
So i was reading through an example and they had a $100M and they took $40M investment out of it in the first year(What happens to the rest $60M, just earning Risk free rate?) and the exit is made at the end of the year with an earning of $22M and the example says that it cant pay carried interest to the Gp because the total is $62M which is not equal to the committed capital of $100M, but we do have those $60M backyards in the garden so we can pay the entire committed capital.
So if we take the entire Committed capital and try to cover it with return from each investment, How does the things go with investments being made in 2 different portfolios. Say for example rest $60M is also invested at the beginning of the year and it earns $39M. So even now carried interest is not paid to the GPs since it amounts to only $99M?
The example i am talking about is on page 84(study session 13) schweser notes , book 4
thnxx in advance
So i was reading through an example and they had a $100M and they took $40M investment out of it in the first year(What happens to the rest $60M, just earning Risk free rate?) and the exit is made at the end of the year with an earning of $22M and the example says that it cant pay carried interest to the Gp because the total is $62M which is not equal to the committed capital of $100M, but we do have those $60M backyards in the garden so we can pay the entire committed capital.
So if we take the entire Committed capital and try to cover it with return from each investment, How does the things go with investments being made in 2 different portfolios. Say for example rest $60M is also invested at the beginning of the year and it earns $39M. So even now carried interest is not paid to the GPs since it amounts to only $99M?
The example i am talking about is on page 84(study session 13) schweser notes , book 4
thnxx in advance