3. Fund IX has $500M in committed capital with 20% carried interest where carry basis is all committed capital. The partnership agreement requires priority return of 10% with 100% catch-up. Suppose all committed capital is drawn down on the first day of the fund. Total exit proceeds are $800M. Suppose also that $540M of these proceeds come at end of year 1, $70M in year 2 and remainder in year 3.

a)How much will LP and GP receive in each of year 1, 2 and 3 under catch-up provision?

You will need to use some words to provide explanation.

Year 1 LP

Year 1 GP

Year 2 LP

Year 2 GP

Year 3 LP

Year 3 GP

b)How much will GP's total carry be with no catch-up provision?