SD-03.5 — Fund Commitment & Subscription

Business Domain: BD-03 Manager & Fund Investment (Front office) · Applies: PRIV

Purpose

Executes the legal commitment to a closed-end fund and manages the subscription process. Fund Commitment & Subscription is one of the two execution paths of BD-03 — the private-markets path, where the institution becomes a limited partner in a fund with a capital-call lifecycle, a fixed term and a J-curve. It turns an approved-by-the-IC selection into a legal LP interest: negotiating the agreement, securing the institution’s bespoke terms, completing the subscription, and joining the fund at a closing. SD-03.5 cannot start a subscription without the Investment Committee authorisation from SD-03.9 Fund-Commitment Approval & Authorisation — the IC gate is the trigger that releases the legal close to proceed.

Service Operations

Negotiate and review the LPA — the limited partnership agreement: economics, governance, key-person and investment-period terms.
Negotiate the side letter and co-investment rights — the institution’s bespoke terms — fee arrangements, reporting, excuse rights — and the co-investment rights that originate later BD-04 deal flow.
Complete the subscription — the subscription documents, AML / KYC and investor-eligibility certification.
Participate in fund closings — join at the first, an interim, or the final close, with the equalisation payment due for a later close.
Run the most-favoured-nation election — after final close, review the disclosed universe of other LPs’ side-letter terms and elect the more favourable ones the institution is entitled to.
Set up the capital account — establish the institution’s capital account and undrawn-commitment balance against which calls are drawn.

Inputs and outputs

Inputs: the SD-03.9 IC authorisation (the trigger that lets the legal close proceed); the selection recommendation (SD-03.2) and investment due-diligence report (SD-03.4); the commitment-pacing budget from SD-01.10; the fund’s LPA and subscription documents.
Outputs: an executed LP Commitment — consumed by BD-12 SD-12.8 (which processes the capital calls and distributions against it), SD-03.6 (which monitors the manager) and SD-09.7 (which forecasts its cash flows).

Entities

Consumes: the SD-03.9 IC authorisation (the gate that releases the legal close); Fund & Vehicle (PM-01), Fund Terms (PM-10); the SD-01.10 pacing budget; the SD-03.2 selection recommendation; the SD-03.4 investment due-diligence report.
Owns: LP Commitment (PM-06) — the institution’s committed and undrawn capital in a fund, and the side-letter terms attached to it. SD-03.5 is its authoritative source.

Standards

ILPA Principles 3.0 (2019) and the ILPA Model Limited Partnership Agreement (with the ILPA Model Subscription Agreement and ILPA Model NDA) for the LPA and side-letter documentation. The most-favoured-nation election is the industry-standard mechanism by which side-letter terms are equalised across LPs.

Open extensions

A Side Letter entity — the bespoke per-LP terms are a managed obligation set, consumed downstream by SD-10.5 Side-Letter & Fund-Term Compliance.
The boundary with SD-03.7 — SD-03.5 is the closed-end fund-commitment path; SD-03.7 is the open-ended segregated-mandate path.