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FRM Part II · FRM Exam Part II · Private Markets Investing

A pension fund has committed $50 million to a buyout fund. To date the fund has called $30 million of capital and distributed $9 million. The fund's current net asset value is $36 million. What is the fund's DPI (distributions to paid-in capital) and TVPI (total value to paid-in capital)?

DPI is 0.30 and TVPI is 1.50. Both multiples use paid-in capital of $30 million as the denominator. DPI is distributions of $9 million divided by $30 million, while TVPI adds the $36 million NAV to distributions, giving $45 million divided by $30 million.

  1. ADPI 0.30; TVPI 1.50Correct
  2. BDPI 0.18; TVPI 0.90
  3. CDPI 0.30; TVPI 0.90
  4. DDPI 0.18; TVPI 1.50

Explanation

DPI = distributions / paid-in capital = 9/30 = 0.30. TVPI = (distributions + NAV)/paid-in = (9+36)/30 = 1.50. Using the $50 million commitment as the denominator gives 0.18 and 0.90, which is the wrong base, since these multiples use paid-in capital rather than committed capital.

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