Dry close (Dry closing) meaning

In private equity and venture capital fund formation, a dry close (dry closing) is a closing at which the fund accepts investors’ capital commitments but the general partner agrees not to levy management fees, and typically not to draw capital (other than for agreed organisational expenses), until investing actually begins or the investment/commitment period starts. It is a market term rather than one defined in legislation or case law, and its usage is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. Key features and drafting points: - Management fee start date is deferred to a defined trigger (for example, first investment, first drawdown for investments, or commencement of the investment period). Fees are usually not back‑charged for the dry period unless expressly agreed. - Capital calls before the trigger are commonly limited to organisational and establishment costs, with any caps set out in the limited partnership agreement (LPA) and offering documents. - Equalisation mechanics for later closes operate as usual; the dry close affects fee timing, not commitment size or carry. - The arrangement is documented in the LPA and, if relevant, investor side letters. A dry close contrasts with a “wet” close, where fees (and often investment drawdowns)...