Sign inWhat is TVPI in private equity?
TVPI is total value to paid-in capital: realised distributions plus remaining unrealised value, divided by capital contributed.
TVPI = (distributions + residual value) / paid-in capital
How practitioners use it
TVPI is the fullest single picture of fund performance because it counts both cash returned and what is still held. It is also the easiest number to flatter, because the residual value is a mark rather than a transaction.
The useful discipline is to split TVPI into its two halves. DPI is what has been proven. RVPI is what is still a claim about the future.
A fund late in its life with TVPI of 2.0x and DPI of 0.4x is telling a very different story from one with TVPI of 2.0x and DPI of 1.7x.
Worked example with round numbers
01
Paid-in capital of 100, distributions of 60, residual value of 90.
02
TVPI is 1.5x, DPI is 0.6x, and RVPI is 0.9x.
03
Most of the reported performance is therefore still unrealised.
Where people get it wrong
- Comparing TVPI across vintages without accounting for fund age.
- Reading TVPI as cash returned. Only DPI is cash.
- Ignoring valuation policy differences between managers.
Learn it by using it
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