How to Track Side Letters as an LP After You Close

How to track side letters as an LP is the ledger you keep after you already own the fund: extra terms next to the LPA, not a negotiation playbook. Raziel's fund-of-funds tracking page is one LP row for the FoF capital account. This page is seven fields on the letter you signed: counterparty, date, MFN yes/no, fee, excuse, reporting, or other rights, sunset or expiry, evidence file, last reviewed.

This is not legal, tax, or investment advice. Raziel does not provide it. Copy the signed side letter. Do not invent MFN mechanics or a market package of rights.

What this ledger is (and is not)

ILPA Principles 3.0 (June 2019) treats side letters as a real cost of formation. The cost of negotiating and complying with them can be sizeable. GPs should seek whenever possible to include provisions common across the majority of a fund's side letters into the LPA itself. Negotiating costs should be an organizational expense, subject to any agreed cap. Costs outside that cap should be fully disclosed. LPs should endeavor to limit side letters to essential statutory or other institution-specific requirements. The signed side letter is the source of truth.

Seven columns on one fund row

Open one row per legal interest after close. Do not collapse two vehicles that share a GP brand. If you are an LP in a fund of funds, the FoF capital account is still one NAV row. A side letter with the FoF GP sits on that same commitment. Underlying funds' side letters belong to the FoF unless you also committed directly. Copy each field from the letter, and later from any MFN notice the GP actually sent you. If a field is missing, store that it was missing.

• Counterparty. GP, fund, or manager named on the letter, next to your LP entity. Legal names, not the brand.

• Date. Date on the signed letter. If undated, store undated.

• MFN yes/no. Whether your letter includes a most-favored-nation clause. Copy the sentence. Do not infer it from a later compendium you did not elect under.

• Fee, excuse, reporting, or other rights. Labels for rights printed: fee, excuse, reporting, co-investment, ESG, information, or other. Copy titles. Do not fill a market menu.

• Sunset or expiry. Any end date the letter names.

• Evidence file. The signed PDF and any amendment. A summary email is not the letter.

• Last reviewed. Date you last checked the row against the letter or a later notice.

MFN is yes or no on the letter you signed

Do not invent how MFN works. Your cell is whether your letter includes it. The ILPA Model LPA Whole of Fund term sheet (July 2020) is a template. It has the GP give notice of all Side Letter terms reasonably promptly after the Final Closing Date. If a Side Letter grants more favourable rights, each other Partner has the benefit of those rights, except four listed carve-outs (policy, regulatory, or tax rights particular to that Partner; affiliate-transfer consents; excuse rights; Advisory Committee nomination). The Model also says side-letter terms bind the GP and the Fund Manager and, in case of conflict, prevail for that Investor over the Partnership Agreement or Subscription Agreement. Copy yours.

ILPA's March 2023 analysis recommends a best-in-class MFN process: a category-grouped compendium of relevant terms not in the LPA, no opt-out that would exclude an LP's terms, and bracketed timing of 60 calendar days from final closing to send the compendium and 30 calendar days to elect. Those days are ILPA's brackets, not your window unless your documents say so.

Rights are copied from the letter, not inferred

Fee, excuse, reporting, and other rights are labels for what your letter actually grants. Principles 3.0: the presentation of allocable and charged fees and expenses should be consistent with provisions in the limited partnership agreement and side letters. Where rights to evaluate or participate pro-rata in co-investment opportunities have been granted via side letters, GPs should disclose the existence of such arrangements to all LPs. GPs should endeavor to provide an equivalent standard of care to all partners and not let arrangements with one LP disadvantage others or disproportionately advantage the GP.

ILPA Reporting Template v. 2.0 Suggested Guidance (January 2025), Section VI: because of LP opt-outs and specialized offset or waterfall provisions in certain LP side letters, an individual LP's allocation for some balances may be an approximation for context, not a precise share. If your letter changes an offset or an excuse, the quarterly template may not reprint the clause. Keep the clause on this row. Check the pack against it. Do not invent a fee discount, an excuse list, or a reporting cadence the letter does not print.

When the ledger holds

A right that sunsets is not live after the date the letter names. Store the sunset, the file, and a last-reviewed date. When an MFN notice or amendment lands, reopen the evidence file, update the row if you elected or signed something new, and stamp last reviewed. The row holds if counterparty and date match the signed letter, MFN is yes or no as printed, rights are copied not inferred, sunset is the letter's or none, the evidence file opens, and last reviewed is dated. It fails when you invent MFN mechanics, paste a Model LPA carve-out list as your elections, or treat a FoF look-through as your own side letter. Raziel's alternative-asset dashboard is the investment record those rows can sit on: cash dates, documents, IRR and MOIC, AI ingest of the pack, capital calls, wallets and bank linking. Raziel does not negotiate side letters and does not give legal or investment advice. Copy the seven columns. Leave the letter to the letter.