TVPI, DPI, RVPI, MOIC: Private Equity Multiples Explained

TVPI, DPI, RVPI, MOIC

Private equity performance measurement is its own dialect. Public equity uses time-weighted returns, Sharpe ratios, and standard deviations. Private equity uses cash multiples and IRR. The four multiples every CAIA candidate must know cold are TVPI, DPI, RVPI, and MOIC.

These ratios sit at the heart of LP-GP reporting, secondary market pricing, and the entire private-fund due diligence process. Private equity carries 10-20% of CAIA Level I (CAIA Association), and the multiples appear in every fund-evaluation question.

The Building Blocks

Before the ratios, four numbers:

• Paid-In Capital (PIC): cumulative capital called from LPs. Includes investments, management fees, and expenses.
• Invested Capital (IC): capital actually deployed into portfolio companies. Excludes management fees and partnership expenses.
• Distributions (D): cumulative cash distributions returned to LPs from realizations (sales, dividends, recapitalizations).
• Residual Value (RV) or Net Asset Value (NAV): the GP's mark of the fair value of remaining unrealized investments.

The distinction between PIC and IC matters. A fund that calls $100M from LPs but only deploys $90M into deals (because $10M went to fees) has PIC = $100M and IC = $90M. The LP cares about PIC. The GP often markets MOIC against IC, which makes the ratio look better.

TVPI: Total Value to Paid-In

\[ TVPI = \frac{D + RV}{PIC} \]

TVPI is the LP-perspective total return multiple. It tells you how much the LP has received plus what is still expected to come, all divided by what they put in (including the fee load).

A TVPI of 1.0x means break-even on a multiple basis. A TVPI of 2.0x means the LP has doubled their money on a gross-multiple basis (net of GP fees, before adjusting for time). A TVPI below 1.0x at fund maturity means the fund lost money.

TVPI vs IRR

TVPI ignores time. A fund that returns 1.8x in 4 years is much better than a fund that returns 1.8x in 12 years. Always read TVPI alongside IRR. Cambridge Associates and Burgiss both report quartile distributions of TVPI and IRR side by side for exactly this reason.

DPI: Distributions to Paid-In

\[ DPI = \frac{D}{PIC} \]

DPI is the realized portion of TVPI. It strips out the unrealized residual NAV and only counts cash that actually came back to the LP.

This is often called the realization multiple or simply cash-on-cash return. It is the most conservative of the four ratios because it cannot be inflated by GP marks.

When DPI Matters Most

• Late-stage fund evaluation (year 8+).
• Secondary market pricing: secondary buyers pay a discount to NAV, so they care about the realized cash record, not the GP marks.
• Re-up decisions: an LP deciding whether to commit to Fund III often weights DPI of Fund I much more than TVPI of Fund II (which is too young to mean much).

RVPI: Residual Value to Paid-In

\[ RVPI = \frac{RV}{PIC} \]

RVPI is the unrealized portion. It tells you how much value is still locked up in the GP-marked NAV of unsold portfolio companies.

By construction:

\[ TVPI = DPI + RVPI \]

The split between DPI and RVPI tells you where the fund is in its life. A young fund (year 2) might have TVPI of 1.1x with DPI of 0.0x and RVPI of 1.1x. A mature fund (year 12) might have TVPI of 2.0x with DPI of 1.9x and RVPI of 0.1x.

RVPI as a Risk Signal

A high RVPI on a fund that should be winding down (year 9 or later) is a warning. Either:

• The GP is holding portfolio companies past their natural exit window (often a sign of overpriced inventory the market will not buy at the marked level).
• The GP marks are aggressive and a haircut is coming.
• The fund extension is being used to ride out a cyclical low.

None of these is necessarily fatal, but each requires investigation.

MOIC: Multiple on Invested Capital

\[ MOIC = \frac{TV}{IC} = \frac{D + RV}{IC} \]

MOIC uses invested capital (deployed into deals) rather than paid-in capital (what the LP gave the fund). For a fund with no fees and no expenses, MOIC equals TVPI. In practice, MOIC is always higher than TVPI because the IC denominator is smaller.

MOIC is most useful at the deal level. A GP evaluating a single portfolio company exit cares about how much they made on the equity check they wrote, not the LP's all-in fee load.

The J-Curve

In the first 2-3 years of a fund's life, fees are called but distributions have not started. Investments are marked at cost and periodically written down for losers. The result: cumulative TVPI and IRR are below 1.0x and negative, respectively.

A typical pattern:

| Year | TVPI | DPI | IRR |
|---|---|---|---|
| 2 | 0.85x | 0.00x | -10% |
| 4 | 1.10x | 0.20x | 5% |
| 6 | 1.45x | 0.65x | 12% |
| 8 | 1.80x | 1.40x | 18% |
| 10 | 2.00x | 1.85x | 19% |

The shape resembles the letter J: down, then sharply up. Hence the name.

This matters for LP communication. A fund showing TVPI of 0.85x at year 2 is not failing. It is in the J-curve. LPs who panic and try to sell on the secondary market in year 2 typically take a big haircut to NAV.

Vintage Year and Quartile Comparison

A fund's vintage year is the year it makes its first investment (some sources use first close). Performance only makes sense compared to peers of the same vintage, because each vintage faces a different deal market, exit market, and macro environment.

Cambridge Associates publishes vintage-year quartile distributions. A 2018-vintage buyout fund with a TVPI of 1.6x at year 6 is a top-half result, not because 1.6x is intrinsically good, but because the 2018 vintage median is 1.4x and the top quartile cutoff is 1.7x.

How These Multiples Pair with IRR

The four multiples and IRR together form the standard private-equity scorecard:

• MOIC: deal-level multiple, time-blind.
• TVPI: LP multiple, time-blind.
• DPI: realized portion of TVPI.
• RVPI: unrealized portion of TVPI.
• IRR: time-weighted return, sensitive to capital-call timing.

A top-quartile buyout fund typically reports TVPI of 1.8-2.2x with IRR of 18-25% (Cambridge Associates). Lower-quartile funds finish around 1.0-1.3x TVPI and below 8% IRR.

Kaplan-Schoar PME (Public Market Equivalent) is the standard benchmark for whether the IRR justifies the illiquidity. CAIA Level II goes deeper on PME variants. At Level I, the four multiples plus IRR are enough.

What CAIA Level I Tests

• Direct calculation. Given PIC, IC, distributions, and NAV, compute each multiple. Watch the denominator carefully.
• PIC vs IC distinction. A common stem describes a $500M fund with $50M of fees. PIC = $500M, IC = $450M. TVPI uses 500. MOIC uses 450.
• DPI as a maturity signal. Given two funds with the same TVPI, identify which is more mature based on the DPI/RVPI split.
• J-curve interpretation. Why is a year-2 TVPI of 0.9x not necessarily bad?
• Vintage comparison. Why is comparing absolute TVPI across vintages misleading?

Common Mistakes

• Confusing PIC with committed capital. Committed capital is the total LP commitment ($100M). PIC is what has been called so far ($60M in year 4, perhaps). The denominator for TVPI is PIC, not committed capital.
• Adding IRR to TVPI. They measure different things. Quote both.
• Trusting RVPI without scrutiny. GP marks are estimates. Cross-check against the realized track record (DPI) and the secondary market.
• Forgetting that MOIC denominator is IC, not PIC. Easy to slip up under exam pressure.

How to Practice

Review the four formulas plus the J-curve narrative on the CAIA Level I formula sheet, then drill calculation questions on FreeFellow.

The free CAIA Level I question bank includes a Private Equity topic filter. Build the muscle of identifying the right denominator on every question. Half the candidates who miss these questions did the arithmetic correctly but used the wrong denominator under time pressure.

If you can read a fund table and produce TVPI, DPI, RVPI, and MOIC in under 90 seconds, you will save several minutes on the PE-heavy section of the exam. That margin lets you spend more time on the harder hedge fund and structured product questions later in the day.