CFA Level IAlternative InvestmentsMedium
A private equity fund has called down $80 million of committed capital from its limited partners. To date, it has distributed $50 million back to investors, and the remaining portfolio has a reported net asset value (NAV) of $60 million. What is the fund's Total Value to Paid-In (TVPI) multiple?
- A0.625x
- B0.75x
- C1.375x
- D1.75x
Show answer & explanationAnswer & explanation
Correct answer: C. 1.375x
TVPI = (Distributions + Residual NAV) / Paid-In Capital = ($50M + $60M) / $80M = $110M / $80M = 1.375x. This measures total value created relative to capital contributed, combining realized and unrealized value.
Why the other options are wrong
- A. This is DPI (Distributions/Paid-In), not TVPI, since it ignores remaining NAV.
- B. Incorrectly divides only NAV by paid-in capital, ignoring distributions.
- D. Overstates the ratio by using an incorrect denominator or double-counting NAV.
TVPI (Total Value to Paid-In)
A private equity performance multiple equal to (cumulative distributions + residual NAV) divided by paid-in capital, showing total value generated relative to invested capital.
- TVPI = DPI + RVPI
- DPI reflects only realized distributions
- A TVPI above 1.0x means the fund has created value above capital contributed
Memory trick: Total value = cash back PLUS what's still on the table.