Definition of limited partner LP

Limited partner is a term used to refer to an individual's status within a business. They are either protected from liability or their liability is limited to a determined percentage of the business, usually determined by the number of shares they hold in the company.

Limited partner is also used in private equity to describe secondary investors in a private equity fund. The general partner, or GP, sets up the fund and usually makes an investment in it. The GP, who will manage the investment, then seeks limited partners who are usually institutional or high net worth investors. LPs will take no part in the management of the fund. The investments are usually for a set period of time after which LPs will begin to start seeing returns.

 

limited partner in the news

In October 2012 the president and chief executive of the private equity growth fund wrote a letter to the FT arguing that priivate equity managers should have at least equal tax treatment to their limited partner co-investors.

FT Articles & Analysis

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