# How management fees are calculated A capital call can serve two purposes that look identical on the wire transfer but are economically very different: 1. **Investment calls** — capital drawn to fund a portfolio investment. This reduces the LP's unfunded commitment and increases their paid-in capital. 2. **Fee calls** — capital drawn to pay the fund's management fee to the GP. Whether this reduces unfunded commitment depends on the LPA. Gildi separates these on every notice and in every ledger entry so an auditor can reconcile each kind of call against the fund's fee schedule. ## Fee basis The fund's fee basis is one of: * **Committed capital** — the fee equals the total committed capital multiplied by the annual fee rate, divided by the number of fee periods per year. Common during the investment period. * **Invested capital** — the fee equals the unrealised net asset value multiplied by the annual fee rate, divided by the number of fee periods per year. Common post-investment-period (after step-down). * **Net asset value** — the fee equals the current net asset value multiplied by the annual fee rate, divided by the number of fee periods per year. Used in some hybrid structures. The basis is declared at fund creation and changes only at scheduled step-down dates. ## Step-down rules A fund's LPA typically defines a **step-down**: a scheduled reduction in the management fee at a stated date (e.g., end of investment period) or upon a stated event (e.g., the start of the next fund's investment period). A step-down may change: * **The rate** (e.g., from 2.0 % to 1.5 %) * **The basis** (e.g., from committed capital to invested capital) * **Both** Gildi tracks step-down events as first-class fund configuration. Every fee call after a step-down date uses the post-step-down rate and basis. The fee notice shows which step-down regime applied to that period. ## Periodicity Management fees accrue continuously but are called periodically: * **Quarterly** — `periodicityDivisor = 4`. Most common. * **Semi-annual** — `periodicityDivisor = 2`. * **Annual** — `periodicityDivisor = 1`. For partial periods (e.g., a fund's first quarter after first close mid-quarter), Gildi pro-rates the fee using the configured day-count convention. ## Worked example A fund with €50M committed, 2.0 % annual fee on committed capital, quarterly periodicity, 30/360 day-count. **Standard quarterly fee call:** ``` fee = €50,000,000 × 2.00 % / 4 = €250,000 ``` This €250,000 is split across LPs pro-rata to their commitments (allocation per the [allocation methodology callout](/methodology/_allocation.md)). **Partial-period example** — fund first close on 2026-02-15, first fee call period covers 2026-02-15 to 2026-03-31: ``` days = 30/360 between 2026-02-15 and 2026-03-31 = 45 days yearFraction = 45 / 360 = 0.125 fee = €50,000,000 × 2.00 % × 0.125 = €125,000 ``` ## Fee offsets GPs sometimes earn fees directly from portfolio companies (monitoring fees, transaction fees, advisory fees). The LPA typically requires that some percentage of these "third-party fees" offset against the management fee otherwise owed by LPs. Gildi tracks fee offsets as separate ledger entries with: * The third-party fee source (portfolio company / transaction) * The gross third-party fee amount * The agreed offset percentage (e.g., 100 % offset, 80 % offset, 50 % offset depending on the fund's Limited Partnership Agreement) * The net fee credit applied against the next management fee call The next fee call is reduced by the cumulative net offset credit. If the credit exceeds the next fee call, the surplus carries forward to subsequent fee calls until consumed. ## Fee waivers Some Limited Partners may receive partial or full fee waivers (typically founder investors, employees, or affiliated funds). The waiver is configured per-Limited Partner in Gildi. Gildi applies the waiver after pro-rata allocation: each Limited Partner's fee after waiver equals their pro-rata fee multiplied by one minus their waiver percentage. The waived amount is **redistributed across non-waived Limited Partners** pro-rata to their commitments. The total fee called for the period stays the same; only the per-Limited Partner distribution shifts. Auditors see this redistribution explicitly on the fee notice. ## What this **does not** cover * The pro-rata allocation math itself — see [allocation methodology](/methodology/_allocation.md). * Carry / preferred return — that's a distribution-side concept, not a capital-call-side concept. * The legal definition of "offsettable fees" — that's an LPA-level question; Gildi enforces whatever offset percentages the fund's configuration declares. ## Standards cited * **ILPA Capital Call Notice Standard 2.0** — fee call line items must be itemized separately from investment call line items. * **ILPA Fee Reporting Template** — the structure Gildi uses for the quarterly fee disclosure included with every fund report. ## Audit trail For every fee call, Gildi persists: * The fee basis (committed / invested / NAV) and the value of that basis at call time * The annual fee rate and the periodicity divisor applied * Any pro-rated period (day-count, days, year fraction) * All applicable offset credits and how much was consumed by this call * Per-LP waivers and the redistribution to non-waived LPs * The final per-LP fee amount The fee call notice PDF renders the full computation so an LP can verify their charge without contacting the GP. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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