Setting Up an LP/GP Fund in the UK: A Practical Guide for First-Time Fund Managers

Launching a private equity, debt or real estate fund can be a powerful way to scale your investment strategy, but fund formation comes with regulatory, legal and operational challenges. Understanding the process from the outset can help you launch more efficiently and attract investor confidence.

Start With the Right Foundation

Before launching a fund, you need a clear:

• Investment strategy

• Target investor profile

• Fund size and lifespan

• Fee and carried interest structure

• Financial model with realistic return assumptions and costs

Investors want a compelling opportunity backed by robust planning and a well-defined strategy.

Understanding the LP/GP Structure

Most UK alternative investment funds use a Limited Partnership (LP) structure:

• Limited Partners (LPs) provide capital.

• General Partner (GP) oversees the fund.

• Investment Adviser sources and recommends investments.

• Fund Manager (AIFM) provides regulatory oversight and compliance.

This structure is widely used because it offers flexibility, investor familiarity and tax efficiency.

What Investors Want to See Before Committing Capital

Many first-time managers focus heavily on fund structure, but investors are usually assessing something much simpler:

• Does the team have relevant experience?

• Is there a credible investment strategy?

• Is there a clear pipeline of opportunities?

• Are manager and investor interests aligned?

• Can the fund deliver professional reporting and governance?

A strong track record, robust processes and a clear investment proposition are often just as important as the fund structure itself.

Why Use a Hosted AIFM?

In the UK, fund management, investment advice and fund marketing are regulated activities. To launch an Alternative Investment Fund, you need access to an FCA-authorised Fund Manager.

Obtaining direct authorisation can be costly, complex and time-consuming. A hosted AIFM model offers a faster and more practical route to market.

Benefits include:

• Access to an existing FCA regulatory framework

• Reduced setup time

• Ongoing compliance support

• Established risk management processes

• Regulatory reporting expertise

With this approach, fund managers can focus on fundraising and investment opportunities while experienced professionals oversee compliance and regulatory obligations. Infinity acts as the FCA-authorised fund manager while advisers operate under their own brand as Appointed Representatives.

Five Mistakes First-Time Fund Managers Should Avoid

1. Focusing on fundraising before regulation

Before speaking to investors, it's important to understand the regulatory framework that applies to your fund and marketing activities.

2. Underestimating launch costs

Legal, regulatory, administration, audit and compliance costs need to be considered early in the planning process.

3. Not investing enough time in the financial model

Investors will expect realistic assumptions, credible return projections and a clear understanding of risks.

4. Failing to build the right team

A fund launch requires specialist support from legal, tax, compliance, administration and investment professionals.

5. Assuming fund setup will happen quickly

While some launches move rapidly, legal documentation, banking arrangements, investor onboarding and regulatory requirements can all affect timelines.

Key Documents You'll Need

A successful launch typically requires:

• Investment Memorandum (IM/PPM)

• Limited Partnership Agreement (LPA)

• Subscription Agreements

• Management Agreements

• Investment Advisory Agreements

These documents establish the legal and operational framework of the fund while providing transparency for investors.

How Long Does It Take?

A fund launch can take anywhere from 14 to 36 weeks, depending on the complexity of the structure, legal documentation, regulatory notifications and investor readiness.

Building sufficient time into the process from the start can help avoid delays and keep fundraising plans on track.

How Infinity Can Help

Infinity supports fund managers throughout the fund lifecycle, including:

• Regulated fund manager

• Fund structuring assistance

• FCA hosting for the Fund Advisor and regulatory oversight

• Investor onboarding and AML/KYC

• Fund administration

• NAV calculations and reporting

• Drawdowns and distributions

• Compliance and regulatory reporting

This allows fund managers to focus on sourcing investments and raising capital while experienced professionals handle the operational and regulatory complexities.

Ready to Launch Your Fund?

Launching a fund is a significant undertaking, but with the right structure, regulatory framework and support team, the process can be far more straightforward than many first-time managers expect.

If you're considering launching a private equity, private debt or real estate fund, speak to the team at Infinity to discuss the most efficient route to market.