LP warehousing solutions - LP co-investing to bridge an equity gap of the GP, then gets reimbursed

Hello, 

First post on this forum after hours of reading for years ! I am writing my end of studies thesis and was wondering if anyone had insights on "warehousing" solutions offered by some LPs ? 
I heard (and i may not exactly be correct in what i understood) that some LPs could lend money to GPs (in addition to their subscription) to help the GP if he struggles raising enough money to do its first closing ? 

For example : lets say I am GP1, i want to raise EUR100m for my first fund with a first investment (a company) that I am supposed to buy very soon for 50m. I am struggling to raise those 50m, i just got 2 LPs which gave me 10m each (i.e. 20 in global then). I still need 30m to buy my first asset. 

I heard that some LPs could, in such situations, lend me the remaining amount so as i can realize my first acquisition while i raise this missing equity. Once i have raised this amount (i.e. the 30 missing millions) i will repay the LP (with interests) and everything is back to normal. In terms of structure, if i understood it correctly, the LP that is lending you the money is actually investing himself in the asset you want to buy and becomes a shareholder of the asset (co-investing then?). If i am able to raise the amount i did not have to do the first closing, i repay the LP and buy back his shares of the asset. If i do not have it, the LP keeps the asset. 

Is it something that exists ? On the paper, it would make sense i guess ? I also guess interests would be quite high, to reflect the risk taken by the LP. 

Do you know any LP that can do that ? I heard that Harbourvest could do such a thing ? 

I look forward to having your thoughts / knowledge on that, 

Best from Spain, 

Sebko

 

Vel explicabo et officiis perferendis dolore voluptate. Reiciendis nostrum temporibus in iusto non voluptate qui. Quo qui nesciunt culpa iusto amet velit laborum.

Aliquam neque reiciendis non mollitia est. Aut laborum autem possimus ut molestiae. Sint odio nihil atque blanditiis porro ut totam.

Career Advancement Opportunities

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • Warburg Pincus 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

May 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (91) $281
  • 2nd Year Associate (206) $268
  • 1st Year Associate (389) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (316) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Betsy Massar's picture
Betsy Massar
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Secyh62's picture
Secyh62
99.0
5
dosk17's picture
dosk17
98.9
6
GameTheory's picture
GameTheory
98.9
7
CompBanker's picture
CompBanker
98.9
8
kanon's picture
kanon
98.9
9
Linda Abraham's picture
Linda Abraham
98.8
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”