Quick question:

When using the independent sponsor model, or any model where LP's are contributing most of the capital, I'm trying to understand how the GP's invested capital is treated.

Example:

- If you raise $1M of equity for a deal, $900K from LPs (90%), and $100K from the GP (10%)
- You offer a preferred return to LPs of 10%
- At exit, you repay LPs their Principal + Preferred first, before any catch up or carry

Will the $100K invested by the GP be entitled to receive that preferred return as well?

In other words, when the GP invests in his own transaction (to show conviction and have skin in the game) is his investment treated like an LP investment?

Follow up to that: is the GP entitled to receive his initital invested capital at the same time as LPs, or will he receive it after they've been paid?