Does the Maximum Portfolio Investment Percentage includes the quota for follow on investment?
If I have a champion portfolio company and want to concentrate and follow on invest in winners, does the original quota e.g. 10% count into this?
Yes — generally, the **Maximum Portfolio Investment Percentage** applies to the **total amount invested in a single portfolio company**, including both:
- the **initial investment**, and
- any **follow-on investments**
So if the cap is **10%**, that usually means the **combined exposure** to that company cannot exceed **10% of total capital commitments**, unless:
- your fund documents explicitly carve out an exception, or
- LPs / LPAC formally approve a waiver or amendment.
If a manager wants to concentrate more into a winner, they should check the LPA, PPM, and side letters carefully.
References:
- https://decilehub.com/base/1-general_questions/19718-define-the-following-lpa-term-maximum-portfolio-investment
- https://decilehub.com/base/1-general_questions/163591-a-fund-s-best-portfolio-company-wants-me-to-double-down-past-the-10-concentration-cap-can-and-what-does-a-gp-have-to-do-to-get-there
- the **initial investment**, and
- any **follow-on investments**
So if the cap is **10%**, that usually means the **combined exposure** to that company cannot exceed **10% of total capital commitments**, unless:
- your fund documents explicitly carve out an exception, or
- LPs / LPAC formally approve a waiver or amendment.
If a manager wants to concentrate more into a winner, they should check the LPA, PPM, and side letters carefully.
References:
- https://decilehub.com/base/1-general_questions/19718-define-the-following-lpa-term-maximum-portfolio-investment
- https://decilehub.com/base/1-general_questions/163591-a-fund-s-best-portfolio-company-wants-me-to-double-down-past-the-10-concentration-cap-can-and-what-does-a-gp-have-to-do-to-get-there