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What is the role of a limited partner in private equity?

Curious about private equity

What is the role of a limited partner in private equity?

In private equity, a limited partner (LP) is an investor who provides capital to a private equity fund but does not take an active role in managing the investments made by the fund. Instead, the LPs entrust the management of their capital to the private equity fund's general partner (GP). The GP is responsible for making investment decisions and managing the fund's investments in order to generate returns for the LPs. The LPs typically receive a share of the profits generated by the fund's investments, in proportion to their investment in the fund. The limited partnership structure allows investors to pool their resources and invest in a diversified portfolio of private companies, while minimizing their risk and exposure to any one investment.

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