Private equity (PE) is often portrayed as an exclusive, high-return asset class—but very few investors fully understand the structures that govern it.
For high-net-worth individuals, family offices, and institutions entering private market investments, understanding fund structures is not just helpful—it’s essential.
Because how a fund is structured determines not just your returns, it shapes your level of control, your legal obligations, and your exposure to risk.
At Growmont, we believe that serious investors deserve clarity before they commit—not just glossy IRRs.
The Foundation: General Partners and Limited Partners
At the core of most private equity structures lies a simple but powerful framework:
- General Partner (GP): The fund manager. GPs are responsible for sourcing deals, managing investments, and making operational decisions.
- Limited Partners (LPs): The investors. LPs contribute the bulk of the fund’s capital but have limited (or no) control over individual investment decisions.
The GP commits some of its own capital to align interests—but most of the money comes from LPs. The GP earns
- Management fees (typically 1.5 – 2.5% annually)
- Carried interest (a share of the profits, usually 20%, above a certain hurdle rate).
It’s a model designed to drive performance—but also one where control is concentrated at the GP level.It’s a model built to drive performance—but one that also concentrates control and decision-making power in the hands of the GP.
Co-Investments: A Direct Route into Specific Deals
In recent years, co-investments have become increasingly popular among sophisticated investors.
Here’s how it works:
- The GP offers selected LPs the opportunity to invest alongside the main fund into a particular deal.
- The co-investor typically pays lower or no management fees or carry on this additional investment.
- Co-investments allow investors to increase exposure to preferred deals without committing more capital to the entire fund.
But beware:
Co-investments offer more opportunity but also demand more diligence.
You have less diversification. More deal-specific risk. And timelines that can be extremely compressed.
Common Variations in Private Equity Structures
1. Blind Pools
Most traditional PE funds raise capital first, then deploy it over a 4–6 year period.
Investors commit without knowing exactly where the money will go—relying on the GP’s track record.
2. Pledge Funds
Investors are given discretion to opt in—or out—of each individual deal.
This offers more control, but less predictability and consistency in capital deployment.
3. Fund of Funds
Funds that invest in multiple underlying PE funds. Offers broad diversification but at the cost of an extra layer of fees.
4. Separate Managed Accounts (SMAs)
Available to Ultra-high-net-worth investors. SMAs allow for Complete control over exposures—but usually require minimum commitments upwards of $50M+.
Each structure carries its own risk-return-liquidity profile—and the right choice depends entirely on the investor’s objectives, governance capacity and appetite for control.
The Hidden Layers That Matter
When analysing a PE fund structure, Growmont’s research process pays close attention to:
- Waterfall structures – how profits are distributed among LPs and GPs.
- Preferred return clauses – whether LPs receive a minimum return before the GP earns carry.
- Catch-up mechanisms – how quickly the GP earns carry after hurdle rates are met.
- Key person clauses – what happens if a lead GP leaves mid-fund.
- Recycling provisions – whether early returns can be re-invested.
Most investors don’t ask about these nuances.
We insist on understanding every layer—because small structural details can swing large financial outcomes.
Conclusion: Structure Drives Outcomes
In private equity, what you earn isn’t just about what you invest in. It’s about how you invest—the structures, the rules, the protections baked into the fund agreement long before the first rupee is deployed. For High-Net-Worth-Individuals and family offices serious about wealth preservation and growth, mastering these nuances is not optional. It’s the difference between smart capital and blind capital.
At Growmont, we don’t just offer access to private equity investments. We offer structured, disciplined entry—aligned with your goals, governed by intelligence, and filtered by experience.
Because in private markets, what you don’t know will cost you. And what you do know can quietly build lasting wealth.