Rollovers refer to the process of transferring uninvested capital from one quarter's fund to the next quarterly fund within a rolling fund structure. This typically occurs when a fund does not deploy all of its capital in a given quarter. The uninvested balance is rolled over as additional capital contributions from the participating Limited Partners (LPs) into the subsequent quarterly fund.
Importantly, rollover amounts are not subject to double management or platform fees, and they increase the investable capital for the next quarter.
By default, an LP's portion of uninvested capital will roll into the next quarterly fund unless:
- An LP has cancelled their subscription and the fund has more than 90 LPs, or
- An LP has canceled their subscription and their roll-over contribution would be less than 10% of their subscription amount
Rollover amounts are generally not considered taxable income until capital appreciation is realized, such as when shares are sold or dividends are received.