Distributions to Paid-In Capital (DPI)

What is DPI in private equity?

DPI, or distributions to paid-in capital, is a private equity performance measure that divides the cumulative distributions a fund has returned to investors by the capital those investors have actually paid in. The formula is DPI = cumulative distributions / paid-in capital. Paid-in capital is money the fund has called and received, not the investor's full commitment.

DPI stands for distributions to paid-in capital (also called distributed to paid-in). It is a ratio, not a percentage:

DPI = cumulative distributions / paid-in capital

Paid-in capital is the money the fund has called and received, not the investor's full commitment. If a family office has committed 20 million and only 10 million has been called, the denominator is 10 million.

Distributions are usually cash and can include in-kind securities. Invest Europe's investor reporting guidelines treat DPI as a cash-on-cash measure, reported net of fees and carried interest, and counting only realised proceeds. Unrealised valuations are left out, which is why DPI is often read as the hard number in a fund report: it cannot be lifted by a mark. ILPA's private equity glossary notes a further wrinkle: recallable distributions belong in the numerator, and capital that is later recalled and reinvested belongs in the denominator, so two people can arrive at a different DPI from the same statements if they treat those items differently.

Illustrative example

This is an illustrative example with round numbers, not a live fund or a benchmark.

A family office has paid 10 million into a private equity fund. To date the fund has distributed 6 million in realised proceeds. DPI is 6 million / 10 million = 0.6x.

If later distributions bring the amount returned to 10 million, DPI is 1.0x. If the amount returned reaches 15 million, DPI is 1.5x.

How to read DPI

• Below 1x: the fund has not yet returned, in realised proceeds, the capital that has been paid in.

• 1x: distributions equal paid-in capital. Investors have their money back in realised proceeds; any remaining portfolio value sits outside this figure.

• Above 1x: the fund has returned more in distributions than was paid in.

DPI says nothing about how long the money took to come back. A 1.5x DPI after four years is a different outcome from a 1.5x DPI after twelve years. For that reason it is read alongside IRR, which accounts for timing, and alongside the residual value still held in the fund.

DPI, TVPI and RVPI

Three related ratios are usually presented together:

• DPI counts only realised distributions.

• RVPI, or residual value to paid-in, divides the fund's remaining net asset value by paid-in capital. It is paper value, not realised proceeds.

• TVPI, or total value to paid-in, adds the two together: (cumulative distributions + remaining NAV) / paid-in capital. In other words, TVPI = DPI + RVPI.

MOIC (multiple on invested capital) is a closely related multiple, often used at deal level as well as fund level. It should not be treated as a drop-in substitute for DPI without checking what sits in the numerator and denominator.

Early in a fund's life, DPI is usually low by design: capital is still being called and invested, and exits have not yet arrived. A mature fund with a high TVPI but a low DPI has most of its reported value still sitting in unsold assets.

Why DPI matters to family offices

Family offices investing in private equity funds use DPI to see how much has actually come back in realised proceeds, which is what they can redeploy, spend or hold, as opposed to a marked-up remaining value. That matters for liquidity planning, for deciding whether to re-up with a manager, and for judging whether a fundraising story is backed by realised proceeds or by valuations.

DPI should not be read on its own. It ignores time, it can be affected by the treatment of recallable distributions, and it can be influenced by fund-level financing that accelerates or delays distributions. Fund-level borrowing used to pay distributions, including NAV financing, can raise DPI without an exit. Compare it with TVPI, RVPI and IRR, and with the fund's age, remaining uncalled capital and exit pace.

Further Reading & Resources

• Invest Europe, Investor Reporting Guidelines: performance measurement and reporting

• ILPA, Private Equity Glossary

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