# Glossary of Private Equity Performance Terms

Average IRR The arithmetic mean of all IRR figures in a given sample of results.

Called-up % The proportion of LPs' commitment to a fund that has already been contributed, including any management fees called.

Carried Interest The share of fund's net investment gains earned by the GP, usually on a whole fund basis, in the case of private equity, after the fund has returned the cost of investment to the LPs. The industry norm is 20%.

Distributed (Distributed to Paid-in or DPI) % The proportion of called-up% that has been returned or distributed to the LPs, after the management fees and carry.

Dry Powder The amount of uncalled capital commitments which are available to the managers to invest.

IRR Internal rate of return is the most commonly used performance benchmark. IRR uses the present sum of cash distributions and the current value of unrealized investments, after applying a discount rate.

Management Fees These are the fees paid to the GP to cover the expenses of running a fund and are calculated as a percentage of capital committed.

Multiple The ratio between the total value that an LP derives from its interest in the fund and its total investment in the fund, expressed as a multiple.

Net IRR% The net returns earned by the LPs after any fees and carry. It is based upon both the realized cash distributions and the valuation of the remaining interest in the fund.

Quartile Ranking A performance quartile ranking that is based on quartile boundaries calculated using IRR and multiple. Funds are ranked by multiple and by IRR. An average of the two ranks is taken and the funds are then ordered from the smallest to the largest and split intro four equal groups.

Remaining Value (Residual Value to Paid-in or RVPI) % The value of the LPs’ remaining interest in the fund as a percentage of the capital called, net of carried interest and management fees.

Total Value to Paid-in (TVPI) % Sum of distributed to paid-in and residual value to paid-in.

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