The limited partnership private equity fund is based on the Partnership Enterprise Law, adopts the organization form of partnership enterprise, and consists of general partners (fund managers) and limited partners (investors). Limited partners are the main providers of funds and do not participate in the daily management of enterprises. As the manager of the enterprise, the general partner accounts for about 1% of the partnership fund. As an incentive, the distribution ratio of future performance rewards of general partners can reach about 20%. Limited partners are liable for the debts of the partnership to the extent of their subscribed capital contributions, while general partners are jointly and severally liable for the debts of the partnership to protect the rights and interests of investors. In this mode, private fund managers can bypass trust companies to raise and operate funds independently. Apart from the particularity within the legal scope and the absence of trust managers, the operating structure of this new private investment fund is no different from Sunshine Private Trust Fund.
Limited partnership has long been the mainstream operation mode of hedge funds in developed capital markets in Europe and America. For example, Warren Buffett first established a partnership company with several relatives at 1956, and started his legendary investment career from this starting point.