Capital call

A request by a private equity or infrastructure fund to its investors to pay in part of their committed capital.

In practice

Notice periods for capital calls are short – often ten to fifteen days – and under the fund documents a missed call can lead to default interest or even the loss of fund interests. In practice, the family office records each commitment with the called and uncalled amounts, estimates future calls per quarter and holds a liquidity reserve that covers several calls arriving at the same time. Distributions are recorded against the same commitment so that net cash flows and returns can be calculated.

Distinctions and common mistakes

The uncalled commitment is not an asset but a future obligation. A common mistake is to plan liquidity on the basis of the fund's net asset value alone and to overlook that calls and distributions rarely offset each other in the early years.

Related terms

Internal rate of return

Money-weighted return that takes into account the size and timing of all cash flows – common for private equity and real estate.

MOIC

The ratio of current value plus distributions to invested capital – it shows how many times the capital has been multiplied.

Mentioned in these guides

• Capital call planning: keeping open commitments under controlHow a family office plans capital calls from private equity and infrastructure funds: unfunded commitments, call patterns, liquidity reserve and deadlines.
• Consolidated wealth overview for the single family officeConsolidated wealth in a single family office: look-through across companies and foundations, one reporting currency, performance and illiquid assets.
• Compliance calendar: deadlines over a family office's yearWhich deadlines a family office must track over the year: AEOI/CRS, FATCA, registers, foundation supervision, KYC reviews, identity documents and powers.
• Building a family office's reporting frameworkHow a family office builds its reporting: recipients, frequency, contents, data flow through to approval, controls and a template for the monthly report.
• Stress testing family wealthHow a family office stress-tests its wealth: scenarios, look-through, liquidity coverage, a worked calculation, common mistakes and agreed measures.
• The CIO in a family office: strategy, selection, oversightWhat the CIO in a family office is responsible for: investment strategy, selecting and monitoring managers, risk, reporting and the investment committee.
• The investment process in a family office: from idea to monitoringHow a family office structures investment decisions: pre-screening, due diligence, investment memo, decision, limits, monitoring and exit.
• Year-end closing across all family structuresHow a family office organises the year-end closing across holdings, foundations and private wealth: timetable, valuation, deadlines in CH, DE and AT.