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发表于 2011-3-22 14:34 | 只看该作者

Reading 49: Private Equity Valuation-LOS h 习题精选

compare, private, relevant, investor, 2011
Session 13: Alternative Asset Valuation
Reading 49: Private Equity Valuation

LOS h: Interpret and compare financial performance of private equity funds from the perspective of an investor.

 

 

The relevant measure of cash flows for the limited partners (LPs), and the LPs’ realized return from investment in the private equity fund, respectively, is:

Return metric

LPs’ realized return

A)
Gross IRR Residual value to paid-in capital
B)
Paid-in capital Net IRR
C)
Net IRR Distributed to paid-in capital

 

Net IRR measures the cash flows between the fund and the limited partners and is therefore the relevant return metric for the LPs. Distributed to paid-in capital (DPI) measures the LPs’ realized return from investment in the fund. It is calculated as the cumulative distributions already paid to the LPs over the cumulative invested capital.

Gross IRR measures the cash flows between the fund and the portfolio companies. Residual value to paid-in capital (RVPI) measures the LPs’ unrealized return from the fund. Paid-in capital measures the percent of capital used by the general partner.

[此贴子已经被作者于2011-3-22 15:19:48编辑过]

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土豆妮

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发表于 2011-3-22 14:34 | 只看该作者

An investor in a private equity fund realizes that the residual value to paid-in capital (RVPI) is fairly large relative to the paid-in capital (PIC). The most appropriate conclusion drawn by the investor would be that:

A)
 it will take longer for the investor to realize a return from the fund.
B)
 the fund successfully earned profits from its investments.
C)
 there were significant cash flows from the fund to the investor.

Paid-in capital measures the ratio of capital drawn down as a fraction of total committed capital. Residual value to paid-in capital is the value of the investor’s holding in the fund as a ratio of cumulative invested capital.

A high RVPI to DPI ratio indicates that the fund is having difficulty realizing profits from its investments. In this case it would take longer for the investor to receive distributions from the fund (low cash flows to date).

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土豆妮

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3#
发表于 2011-3-22 14:34 | 只看该作者

An analyst is considering the performance of two private equity funds, Delta and Kappa.

Performance of private equity fund Delta and Kappa

Delta

Kappa

DPI

2.0

0.0

RVPI

0.0

2.0

TVPI

2.0

2.0


The most appropriate conclusion an analyst can draw from the table is that:

A)
 Kappa may be a younger fund than Delta.
B)
 Delta has yet to turn a profit.
C)
 Kappa has distributed $2.0 for every dollar invested.

Delta’s distributed to paid-in capital (DPI) ratio of 2.0 indicates that investors in the fund realized a profit of $2.0 for every dollar invested and that this profit has already been paid out. Kappa’s multiples indicate that the fund has yet to pay out profits to its investors. The residual value to paid-in capital (RVPI) of 2.0 implies that all returns are still unrealized and will be paid out in future years. One likely explanation for Kappa’s multiples is that the fund is younger than Delta.

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