Side Letter
Private Credit glossary · Portfolio Management, Monitoring & Workouts
Definition
Bilateral agreement between the GP and an LP modifying specific economic or governance terms outside of the LPA.
Side Letter in plain English
When a big investor puts money into a fund, everyone signs the same master rulebook (the LPA). But some investors are big or special enough to say "I'll invest, but only if you tweak a couple of rules just for me" — maybe lower fees, or the right to see reports early. A side letter is that private, one-on-one add-on deal between the fund manager (GP) and that single investor (LP), sitting on top of the shared rulebook. Think of a group ordering off a set menu, but one person quietly arranges with the waiter for extra sauce and a discount — the main menu still stands, they just have a personal side arrangement.
Related Private Credit terms
Private Credit practice questions · Private Credit flashcards · Private Credit study guide