For limited partners, managing capital calls is a crucial part of the investment process and an ongoing challenge. Missing a capital call is the biggest risk for LPs when it comes to cash flow management, and traditional metrics don’t fully account for the variability. PitchBook’s new Capital Call at Risk framework, introduced in our latest analyst note, can help LPs better prepare for an unpredictable future. Key takeaways include:
– The customizable CCaR metric estimates worst-case liquidity requirements and can be calculated for a single fund or a portfolio.
CCaR leverages our cash flow management framework and robust historic data to tailor its projections.
– Capital calls become more predictable as fund commitments are added to a portfolio, reducing shocks if actual liquidity requirements exceed the CCaR estimate