Module IV· IRR / MOICIntermediate
Question
What is 'DPI' (distributions to paid-in capital) and how does it differ from MOIC?
Answer
What
DPI and MOIC measure different things:
- DPI (distributions to paid-in capital): only actual cash distributions. What the LP has "in hand".
- MOIC / TVPI — cash distributions plus current NAV (mark-to-market of the unrealized positions). The total picture, including "paper money".
Why LPs prefer DPI
Cash can't be manipulated. NAV marks can be set optimistically by the GP. A DPI above 1.0x means the LP has at least gotten its full investment back.
Deep diveShow more details
Example — PE fund Year 5
| Item | Value |
|---|---|
| Paid-in capital (LP investment) | $1,000m |
| Cumulative distributions | $600m |
| Current NAV (unrealized) | $800m |
| DPI | 600 / 1,000 = 0.6x |
| TVPI / MOIC | (600 + 800) / 1,000 = 1.4x |
Industry benchmarks (middle-market)
| Fund phase | Typical DPI | Typical TVPI |
|---|---|---|
| Mature (Year 8+) | 1.5–2.5x | 1.8–2.8x |
| Mid-stage (Year 4–7) | 0.5–1.5x | 1.5–2.5x |
| Early (Year 1–3) | 0.0–0.3x | 1.0–1.3x |
Pitch tip
Question: "Which metric does an LP use for performance comparison?"
Answer: "DPI as the main metric — cash distributed can't be manipulated. TVPI has marking subjectivity. LPs want DPI above 1.0x (cash-on-cash positive) by Year 5–6. In the fundraise I show both metrics; the LP focuses on DPI"