boltKey takeaways
- A PCAP rolls one partner's capital account forward from beginning to ending balance: contributions, distributions, allocated income, expenses, gains and carry.
- The ending capital balance is the partner's share of fund NAV, and the sum of all PCAPs should equal partners' capital on the fund's balance sheet.
- Most PCAP errors come from allocation rules: fee-free partners, side letter rates, late closers and carried interest accruals.
- Show both quarter-to-date and since-inception columns, plus commitment and unfunded commitment, so an LP can reconcile without asking.
- LPs should tie contributions and distributions to their own cash records each quarter and query differences promptly.
A partner capital account statement, usually shortened to PCAP, is the periodic report showing one investor's economic interest in a fund. It starts with the partner's capital balance at the beginning of the period, adds contributions and allocated gains, subtracts distributions, fees, expenses and losses, and arrives at an ending balance that represents that partner's share of the fund's net asset value. For most LPs it is the single most important number a GP sends each quarter.
This guide explains what belongs on a PCAP, how each line is produced, and how both sides can verify it.
Why the PCAP matters#
An LP in a private fund cannot look up a market price for its interest. The PCAP is its substitute. LPs use it to:
- Record the investment in their own books at fair value.
- Calculate performance, including multiples such as TVPI and their own internal rate of return.
- Track unfunded commitments for liquidity planning.
- Satisfy their own auditors and boards, who ask for support for every private fund holding.
For the GP, the PCAP is where the fund's accounting meets the limited partnership agreement. Allocation provisions written by lawyers become numbers a partner can check.
What a PCAP contains#
Formats vary, and many GPs base theirs on the ILPA reporting template. A complete statement usually has three blocks.
1. Capital account rollforward#
| Line | What it represents |
|---|---|
| Beginning capital balance | Prior period's ending balance |
| Contributions | Capital called and funded during the period |
| Distributions | Cash or in-kind distributions paid, often split between return of capital and gain |
| Management fees | Partner's share of fees, net of offsets |
| Fund expenses | Partner's share of organizational and operating expenses |
| Net investment income | Partner's share of interest and dividends less expenses, depending on presentation |
| Realized gain or loss | Partner's share of gains and losses on investments sold |
| Change in unrealized gain or loss | Partner's share of the period's fair value changes |
| Carried interest allocation | Reduction for carry allocated or accrued to the GP (for LPs) |
| Ending capital balance | Partner's share of NAV at period end |
2. Commitment summary#
Total commitment, cumulative contributions, any recallable distributions added back, and the remaining unfunded commitment.
3. Since-inception and performance data#
Cumulative columns for each rollforward line, and often the partner's net IRR and multiples.
Presenting quarter-to-date, year-to-date and inception-to-date columns side by side saves a great deal of back-and-forth. An LP can tie the current quarter to cash, the year to their annual audit, and the inception column to the subscription agreement and every prior notice.
How the numbers are produced#
The PCAP is derived from the fund's general ledger. Each period, the fund's net results are allocated to partners according to the LPA, and each partner's activity is recorded in a capital account subledger.
Allocation keys#
Most items are allocated pro rata, but the basis varies:
- Commitment percentage is common for expenses and for gains when all partners have funded equally.
- Contributed capital percentage may be used when partners have different funding histories, such as defaulting partners or excused investments.
- Investment-level participation applies where some partners were excused from a particular deal for regulatory or policy reasons.
Special allocations#
Some lines do not follow the general key:
- Management fees are charged at each partner's own rate. Fee-free GP commitments and side letter discounts mean two LPs with the same commitment can have different fee lines.
- Late-closer adjustments charge subsequent-closing investors their share of prior costs, often with an additional amount, and credit earlier partners.
- Carried interest is allocated based on a hypothetical liquidation of the fund at reported NAV, run through the distribution waterfall. The resulting accrued carry reduces LP capital and increases the GP's.
Accrued carry is not paid carry#
The carry line on a PCAP is usually an accrual: what the GP would receive if the fund were liquidated at current values. It moves up and down with valuations and is not a cash payment. Good PCAPs label it clearly and show carry distributed separately from carry accrued.
Worked example#
Assume a hypothetical LP with a $10M commitment to a fund. During the quarter:
- The LP funds a $1.5M capital call.
- It receives a $600K distribution, $400K of which is return of capital.
- Its share of management fees is $50K and of fund expenses $8K.
- Its share of realized gain is $200K and of unrealized appreciation $450K.
- Accrued carried interest attributable to the LP increases by $120K.
| Line | Amount |
|---|---|
| Beginning capital | 4,200,000 |
| Contributions | 1,500,000 |
| Distributions | (600,000) |
| Management fees | (50,000) |
| Fund expenses | (8,000) |
| Realized gain | 200,000 |
| Change in unrealized gain | 450,000 |
| Carried interest allocation | (120,000) |
| Ending capital | 5,572,000 |
The commitment summary would also show whether the $400K return of capital is recallable. If it is, the unfunded commitment rises by that amount, which matters for the LP's liquidity planning.
Transfers, in-kind distributions and restatements#
A few events need special care on the statement:
- Transfers. When an LP sells its interest on the secondary market, the PCAP should show the transfer date and move the capital balance, commitment and unfunded commitment to the buyer. Agree with both parties whether the transferor or transferee receives the statement for the transfer quarter.
- In-kind distributions. Shares distributed to partners are recorded at fair value on the distribution date, with any gain recognized first, so the distribution line reflects value, not cost.
- Restatements. If a prior period is corrected, show the adjustment as a separate, labelled line in the current period rather than silently changing the beginning balance. LPs rely on beginning balances matching what they booked last quarter.
Checks GPs should run before release#
- Subledger ties to the GL. The sum of all partners' ending capital equals partners' capital on the balance sheet.
- Rollforward integrity. Each partner's beginning balance equals the prior period's ending balance; no silent restatements.
- Cash ties to notices. Contributions and distributions match the capital call and distribution notices sent, partner by partner.
- Fee reasonableness. Each partner's fee divided by commitment matches its contractual rate for the period.
- Carry reasonableness. Accrued carry moves in the direction implied by the change in NAV and respects the hurdle.
- Unfunded commitment. Commitment less contributions plus recallable distributions equals the reported unfunded amount.
Checks LPs should run on receipt#
- Tie contributions and distributions to your own cash records.
- Confirm the beginning balance equals last quarter's ending balance.
- Recompute the fee as commitment, or the applicable base, times your contractual rate.
- Compare the change in your capital to the change in fund NAV; your share should be broadly consistent with your ownership percentage, adjusted for fees and carry.
- Check that the unfunded commitment agrees with your records, especially after recallable distributions.
When something does not tie, ask early. Most discrepancies have simple causes, such as timing of a wire, a misapplied side letter, or a recallable distribution treated differently, but they get harder to unpick each quarter they are left.
PCAPs and tax reporting#
A PCAP is prepared on the fund's book basis, generally U.S. GAAP fair value, and an LP's Schedule K-1 is prepared on a tax basis. The two capital balances will differ, mainly because unrealized gains appear on the PCAP but not on the K-1. LPs should not expect the figures to match and should use each for its intended purpose.
How Privatis helps#
Privatis produces partner capital account statements directly from the fund general ledger, applying fee terms, side letter rates and waterfall allocations at the partner level. Statements are published to the LP portal alongside notices and K-1s, can follow ILPA-style templates, and every allocation change is captured in the audit trail.