Why later closings cost more.

A later closing can look like a break. The new LP skipped the fund's earliest capital calls, the initial risk, and the J-curve. It isn't. They still owe a share of every call that came before them — plus something extra for having waited.

The original rate never changes

When a new LP joins at a later closing, its catch-up contribution for each prior call uses the same rate that applied to everyone else at the time. If the first call was 10 percent of every LP's commitment, the new LP owes 10 percent of its own commitment for that same call — not a blended recalculation across a larger pool, and not a discount for joining late. The rate doesn't change. Who owes a share of it does.

Equalization interest is the extra

The catch-up principal alone would leave the earlier LPs worse off than the new one — their capital was already at work while the new LP's money sat on the sidelines earning nothing for the fund. Equalization interest closes that gap: compensation, set by the LPA, for the months between when the original call was funded and when the new LP catches up. Both the catch-up principal and the interest flow to the LPs who funded the call originally, reimbursing them for having carried more than their final share.

Why the math has to work this way

Without equalization, timing would become a strategy. An LP could hold off committing until a fund's later closings, let everyone else fund the early, riskiest capital, and join at the same ownership percentage without ever having carried the exposure. Equalization interest removes that incentive — a dollar committed on day one and a dollar committed at the final close end up costing the same amount, once the interest is accounted for.

A later closing settles time rather than erasing it.