Process Capitalization for Private Equity

Owned by Nancy Cohn (Deactivated)
Last updated: Oct 02, 2024 by Kinga Huszno
2 min read

In the Cash Distribution/Capitalization/Final Close panel, you can process a capitalization for a private equity fund to recognize income and/or expenses. The Capitalization (LPCAP event) transaction lets you book income/expense for the commitment, as well as book gain/loss. It also adjusts the cost of the private equity position. These transactions affect LP Income and LP Expense, but they do not generate cash or affect the funded and unfunded commitments.

The LPCAP event is part of the Capital Based Fund Investment workflow used when you set up a private equity security with a processing security type of Capital Based Fund Investment (EQCBFI).

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To book capitalization for private equity using the Book Trade tool:

  1. In Accounting Center, in the left navigation pane, click Transactions > Trades > Book Trade/Rebook Trade > Book Trade. 
    You see the Book Trade workspace.

  2. Complete the options in the Search Details pane and click Search.
    You see the search results based on the criteria you selected.

  3. Select the row with the private equity security with holdings you want to update.

  4. On the Book Trade tab, in the Actions group, click Action Rules, point to Other, and then click Capitalization.
    You see the Cash Distribution/Capitalization/Final Close panel.

  5. In the Entity Information section and the Issue Information section, identify the entity and security for the private equity position that you want to update.

  6. Under Capitalization/Cash/Close Information, set Transaction Name to Capitalization.
    You see the fields that apply to a Capitalization transaction. You can view the commitment amount for the private equity fund.

  7. Under Local Values, you can specify an income, expense, and/or gain/loss amount value.
    If you enter an income/expense amount, you can identify the corresponding account number. You can also update the exchange rate.

  8. Under Other Information, in Transaction Notes, you can select a reason for the transaction.

  9. Complete the remaining options on the Cash Distribution/Capitalization/Final Close panel.

  10. Click Submit to process the capitalization.