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Private Capital Performance Terms

Industry Definitions

Delve into the calculations behind private capital performance terms such as DPI, Net IRR, and TVPI.

Industry definitions

Average Net IRR %Average IRR is simply the mathematical mean. Average IRRs must be analyzed with care because the mean value may be strongly affected by outlier IRR values.
Called Up %The proportion of the LP’s aggregate commitments to the partnership that have been contributed to the partnership. These figures are as reported by the LP, so that in cases where the GP and LP have treated part of a distribution as a refund of contributions (and potentially liable to being recalled at a later date) the called up % will be amended accordingly.
Distributed (DPI -Distributions to Paid-in) %The proportion of the called-up capital that has been distributed or returned back to LPs. This will include cash and stock distributions, with the latter valued as at the date of distribution and treated in the same way as a cash distribution. Distributed % is one measure of the cash performance of the partnership that is not subject to judgemental factors (as for value and IRR).
Net Multiple The ratio between the total value that the LP has derived from its interest in the partnership – i.e. distributed cash and securities plus the value of the LP’s remaining interest in the partnership – and its total cash investment in the partnership, expressed as a multiple. It is important to note that this measure does not reflect the time value of money, and therefore will not show whether one partnership has returned value to LPs more quickly or more slowly than another. However, it is one measure of ‘profit’ or ‘loss’ for the LP.
Net IRR %The net IRR earned by an LP to date, after fees and carry. The internal rate of return (IRR) is based upon the realized cash flows and the valuation of the remaining interest in the partnership. IRR is an estimated figure, given that it relies upon not only cash flows but also the valuation of unrealized assets. The IRR estimates shown are both those as reported by the LP and/or GP and those that Preqin has calculated internally, based upon cash flows and valuations, provided for individual partnerships.
Pooled Net IRR %This is calculated by combining multiple funds’ cash flows and calculating an IRR using all funds’ contributions, distributions, and remaining values as if they were from a single fund. Pooled IRRs take into account the timing of each cash flow and the size of each fund. Larger funds will have more influence than the smaller funds and the timing of the distributions will affect performance.
Quartile RankingThis shows which quartile of the relevant peer group the fund falls into. When calculating the quartile ranking, equal weight is placed on IRR and multiple. Top-quartile funds are funds with an IRR or multiple equal to or above the upper-quartile benchmark; second-quartile funds are funds with an IRR or multiple equal to or above the median-quartile figures but below the upper-quartile figures, etc.
Remaining Value (RVPI – Residual Value to Paid-in) %The value of the LPs’ remaining interest in the partnership, as derived from the GP’s valuation of the unrealized portfolio and its allocation of this to the LP. Valuation of unrealized investments expressed as a percentage of called capital.
Total Value to Paid-in (TVPI) %Sum of distribution to paid-in and residual value to paid-in, i.e. distributed cash and securities plus the value of the LP’s remaining interest in the partnership.
VintageDefined as the first year of investment/drawdown from the investor.
Weighted Net IRR %An aggregate IRR calculated by weighting each fund IRR with its fund size, effectively meaning that large funds have more impact on the weighted IRR than small funds.

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Preqin has offices in London, Birmingham, New York, Dallas, Singapore, San Francisco, Hong Kong, Chicago, Tokyo, Sydney, Dubai, Bangalore, Manila, and Guangzhou.

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10 Bressenden Place

Colmore - a Preqin company
9 Colmore Row
B3 2BJ

One Grand Central Place
60 E 42nd Street
Suite 630, New York
NY 10165, United States

Colmore - a Preqin company
1601 Elm St – Floor 33
TX 75201

30 Raffles Place
Singapore 048622

575 Market Street
Suite 2145
San Francisco, CA 94105
United States

Room 1504, The Center
99 Queen's Road Central
Central, Hong Kong

Convene, Suite 305
311 W Monroe Street
Chicago, IL 60606

Level 27,
Tokyo Sankei Building
1-7-2 Otemachi Chiyoda-ku
Tokyo 100-0004

Unit 26 Level 36,
Governor Phillip Tower,
1 Farrer Place, Sydney, NSW,
2000, Australia

Burj Daman
Office 818 - 8th floor
Dubai International
Financial Centre
United Arab Emirates

45/1, Magrath Road
Richmond Town
Karnataka 560025

Pascor Drive
Sto. Niño
Parañaque City
Metro Manila 1700

22F, Shun Tak Business Centre
246 Zhongshan Road 4
Guangzhou - 510000