Reading 48: Private Equity Valuation- LOS j～ Q1-4

general, interest, partner, management, net

LOS j: Calculate management fees, carried interest, net asset value, distributed to paid in (DPI), residual value to paid in (RVPI), and total value to paid in (TVPI) of a private equity fund.

Q1. A private equity fund pays a management fee of 3% of PIC and carried interest of 20% to the general partner using the total return method based on committed capital. In 2008 the fund has drawn down 80% of its committed capital of $250 million, and has a net asset value (NAV) before distributions of $260 million. The 2008 management fee and carried interest paid, respectively, is (in millions):

Management fee: Carried interest:

A) 7.5 50.0

B) 6.0 2.0

C) 7.8 2.0

Q2. Dr. Jason Bruno is a qualified investor in the US who is considering a $10 million investment in a private equity fund. Upon reading the fund’s prospectus, Dr. Bruno encounters several contract terms and expressions with which he is unfamiliar. In particular, he would like to know the meaning of ratchet and distributed paid-in capital (DPI). The most appropriate answer by the fund’s manager to Dr. Bruno would be that ratchet and DPI, respectively, is:

Ratchet DPI

A) The general partner’s share of fund profits The general partner’s realized return

B) The year the fund was set up Dividends paid out as a fraction of paid-in capital

C) The allocation of equity between shareholders and management The limited partner’s realized return from the fund

Q3. The net asset value (NAV) after distributions of a private equity fund is calculated as:

A) NAV before distributions + Capital called down – Management fees.

B) NAV before distributions – Carried interest – Distributions.

C) NAV before distributions + Carried interest – Distributions.

Q4. The Nishan private equity fund was established five years ago and currently has a paid-in capital of $300 million and total committed capital of $500 million. The fund paid its first distribution three years ago of $50 million, $100 million the year after and $200 million last year. The fund’s distributed to paid-in capital (DPI) multiple is closest to:

A) 0.67.

B) 1.17.

C) 0.70.

[此贴子已经被作者于2009-3-10 11:42:35编辑过]