Private credit fund structure

Quick question about fund structure for private credit funds (more MM, direct-lender type funds as opposed to CLOs) that I'm a little embarrassed to ask my coworkers.

How do commitment and other fees factor into IRRs / carry / etc.? There's a deal we wrote a commitment letter for and got a fee (note, not OID since it never funded - a fee purely for doing the work and writing a commitment letter). I assume that money still has to go to the LPs but how is that calculated and what's our carry on it etc.? Are these types of deals more profitable for our GP than a typical funded deal?

 

In my experience at least at a private credit fund carry and IRR are calculated at the fund level and not deal specific, so this would effectively just be treated like any other cashflow and would indeed be reinvested in the fund or distributed to LPs. When presenting the deal in past performance it would show N/A for IRR/MOIC I imagine. While it’s “free profit” and infinite from that perspective the GP should still prefer actually funding the deal (assuming it’s accretive to profits or getting over the hurdle) as earning more interest increases dollars of fund profits and thus carry.

 

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