Realized proceeds can usually be recycled **only if the LPA expressly allows it**.

Common conditions:
- the fund has a **recycling clause**
- recycling is allowed only **during the investment period** or another defined window
- recycling capacity may arise only **after a given LP has received distributions equal to that LP’s contributed capital**
- the recycled amount must stay within any **cap** set in the LPA

If the LPA does **not** allow recycling, proceeds are generally **distributed to LPs** instead.

In practice, recycled proceeds may be used for **new investments or follow-ons**, depending on the LPA and fund strategy.

References:
- https://decilehub.com/base/1-general_questions/20356-early-exists-in-the-fund-should-distribute-proceeds-or-reinvest
- https://decilehub.com/base/1-general_questions/21588-are-recycled-provisions-generally-only-used-for-new-investments-or-also-for-follow-on-investments