FRM Part I · FRM Exam Part I · Fund Management
A buyout fund has drawn down $80 million from its limited partners (LPs) and has distributed $120 million to them so far. The remaining investments have a net asset value (NAV) of $40 million. What are the fund's DPI and TVPI, respectively?
DPI is 1.50 and TVPI is 2.00. DPI divides realized distributions of $120 million by paid-in capital of $80 million. TVPI adds the remaining $40 million NAV to distributions, giving $160 million divided by $80 million, so it includes unrealized value while DPI does not.
- ADPI 1.50; TVPI 2.00Correct
- BDPI 1.50; TVPI 1.50
- CDPI 2.00; TVPI 1.50
- DDPI 1.00; TVPI 2.00
Explanation
DPI = distributions / paid-in capital = 120/80 = 1.50. TVPI = (distributions + NAV) / paid-in = (120 + 40)/80 = 2.00. Choosing 1.50 for both ignores the unrealized NAV in TVPI.
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