What FX does a private equity fund need across its life?
Different FX at each stage, from receiving commitments in several currencies at first close to converting exit proceeds back to the fund's base currency at the end.
| Stage | The FX need | Where the cost usually sits | What to check |
|---|---|---|---|
| Fundraising and closes | Investors commit in USD, EUR or GBP. Equalisation payments at later closes. | Conversions done by the bank at its standard rate, often without anyone asking for a quote. | Accounts that can receive each investor currency in the fund's own name. |
| Investment period | Capital called in one currency and paid out in another to complete deals. | The spread on large one-off tickets, and the extra cost of converting at the last minute. | Cut-offs at both banks, value dates against completion dates, and a price check on every large trade. |
| Holding period | Follow-on investments, management fees, fund expenses and portfolio company flows. | Wide spreads on small recurring payments, payment fees and rates that drift up after onboarding. | Spread by quarter, so a slow rise shows up. Fees per payment and intermediary bank charges. |
| Exits and distributions | Sale proceeds converted back to the base currency and distributed to investors. | One very large trade done under time pressure, plus distribution payments in several currencies. | A plan agreed before signing, competing quotes for the conversion, and verified investor bank details. |
Where do FX costs hide for a private equity fund?
Mostly in the rate itself. The spread between the rate you get and the market mid is rarely shown as a separate charge, so it never appears on an invoice.
- The spread on large tickets. On a £50m conversion, every 10 basis points is £50,000, so a few points either way matters more than any fee.
- Small recurring payments, such as management fees and fund expenses, which often get a much wider spread than the big trades.
- Payment fees and charges taken by intermediary banks along the way, which can mean the payee receives less than you sent.
- Timing: converting on the day of completion or distribution, when there is no time to compare prices.
- Rate creep: a keen rate at onboarding that widens quietly over the following years. Our guide to FX rate creep explains how to spot it.
You can measure all of this from your own trade history. Our FX cost review compares each trade with the mid at the time and shows the spread by pair, size and quarter.
Can FundFX help our portfolio companies too?
Yes, if a portfolio company comes to us directly. Each company is a separate business with its own board and its own decision.
Portfolio companies often import, export or pay staff abroad, and many are still on the FX arrangements they had before the fund invested. A manager can point their finance directors to the same blind quote and cost review process. We deal with each company on its own account, and we never share one company's prices or data with another or with the fund without consent.
Can we move FX away from our bank without upsetting the fund finance facility?
Usually, yes. A subscription line may require investor capital to land in accounts at the lending bank, but that rarely stops you converting currency elsewhere.
Check the account covenants first, then run the new provider alongside the bank. Test with small payments, move one flow at a time and keep the bank account open throughout. Our guide to switching FX provider without disrupting payments sets out a 90-day plan.
How do we start?
Pick your next large conversion, such as a capital call or a completion, and ask for a blind quote on it. Or send us last year's trades for a cost review.
Providers see the pair, amount, date and fund type, but not your fund's name. You compare the indicative prices and decide whether to go further. If you would rather talk it through first, book a confidential call.