Graphite Enterprise invests primarily in funds managed by other private equity managers. These funds are generally structured with a life of ten years. Commitments are drawn down from investors as investments in underlying companies are made and proceeds are returned to investors as investments are realised.

Cash is typically drawn down over a period of four to six years and may begin to be returned in the fourth or fifth year. As a result, the maximum net amount drawn down by individual funds is often considerably less than the amount committed to them.

In order to achieve full or near-full investment from a portfolio of funds, it is therefore usual to make commitments exceeding the amount of cash available for investment. This is described as ‘‘overcommitment’’ in the private equity industry. The level of overcommitment made by investors in private equity funds varies depending on the nature of the underlying investments, expected market conditions for acquisitions and disposals over the medium term and the appetite for risk.