Fund Structure
Recycling Provision
An LPA clause permitting the GP to re-invest early distributions or expenses back into new investments, effectively increasing deployable capital beyond committed capital.
Recycling provisions typically cap the recall amount (e.g., up to 120% of commitments) and the eligibility window (e.g., distributions received within the first 18-24 months, or only return-of-capital amounts).
For LPs, recycling complicates cash forecasting and can extend the period of net capital outflow. It also amplifies fee drag, since the same dollar pays management fee twice. Track the cumulative recycled amount against the cap, and confirm whether recycled distributions count toward DPI in GP-reported metrics.