Investment Dashboard
The Investment Information section allows Investment Sponsors/GPs to track and display investment performance information to their Investors/LPs on their Dashboard.
The information displayed to Investors/LPs is outlined in the following categories:
- Number of Investments Made: the total number of Fully Paid Capital Calls by the Investor/LP.
- Total Invested Capital: the total dollar sum of Fully Paid Capital Calls by the Investor/LP.
- Number of Active Investments: the total number of Fully Paid Capital Calls by the Investor/LP for Organizations where Entity Status = Active.
- Active Invested Capital: the total dollar sum of Fully Paid Capital Calls by the Investor/LP for Organizations where Entity Status = Active.
- Number of Exited Investments: the total number of Fully Paid Capital Calls by the Investor/LP for Organizations where Entity Status = Exited.
- Exited Invested Capital: the total dollar sum of Fully Paid Capital Calls by the Investor/LP for Organizations where Entity Status = Exited.
Note: These sections are always displayed to Investors/LPs to provide an overall summary of their total number of investments.
- Fair Market Value (FMV) of Invested Capital: the total dollar sum of Fully Paid Capital Calls multiplied by the MOIC.
- FMV of Active Investments: the total dollar sum of Fully Paid Capital Calls multiplied by the MOIC for Organizations where Entity Status = Active.
- Exit Value of Investments: the total dollar sum of Fully Paid Capital Calls multiplied by the MOIC for Organizations where Entity Status = Exited.
- Blended MOIC: The blended MOIC across all investments.
- Active Investment MOIC: The blended MOIC across all investments for Organizations where Entity Status = Active.
- Exited Investment MOIC: The blended MOIC across all investments for Organizations where Entity Status = Exited.
- Blended Internal Rate of Return (IRR): The blended IRR across all investments.
- Active Investment IRR: The blended IRR across all investments for Organizations where Entity Status = Active.
- Exited Investment IRR: The blended MOIC across all investments for Organizations where Entity Status = Exited.
Investment Information Settings
The settings that influence the presentation of the Dashboard to Investors/LPs are found within the Organization Info area, which allows the Investment Sponsor to set Entity Status (Active or Exited), Multiple on Invested Capital (MOIC), Effective Date of the MOIC, and whether to Show Multiple on Invested Capital (Yes/No) on the Investors/LPs Dashboards.
Notes on MOIC & IRR Calculations
Multiple on Invested Capital (MOIC)
MOIC stands for "Multiple on Invested Capital," and it is a financial metric used in the context of private equity investments. It is a measure of the return generated by an investment relative to the amount of capital that was initially invested.
Here's how MOIC is calculated:
Where:
Realized Value: The total value of the investment realized through exits, such as the sale of portfolio companies or other liquidity events.
Invested Capital: The total amount of capital initially invested in the private equity fund or investment.
MOIC provides insight into how much money has been returned for every dollar invested. For example, if a private equity fund has a MOIC of 2x, it means that for every dollar invested, the fund has generated $2 in realized value. A MOIC greater than 1 indicates a positive return, while a MOIC less than 1 indicates a loss on the investment.
Internal Rate of Return (IRR)
IRR stands for "Internal Rate of Return," and it is a financial metric used to evaluate the profitability and attractiveness of an investment. It is particularly common in the context of private equity, real estate, and other types of investments where cash flows occur over time. The internal rate of return represents the discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero.
The formula for calculating IRR involves solving for the discount rate at which the sum of the present values of cash inflows equals the sum of the present values of cash outflows. Mathematically, it can be expressed as follows:
Where:
NPV is the net present value of all cash flows.
T is the number of periods.
CFt represents the net cash flow during period T.
IRR is the internal rate of return.
In practical terms, the IRR is the discount rate that, when applied to the future cash flows of an investment, results in a net present value of zero. In other words, it is the rate of return that makes the total value of inflows equal to the total value of outflows.
Investors and analysts use IRR as a tool to assess the potential profitability of an investment and to compare different investment opportunities. A higher IRR generally indicates a more attractive investment, as it suggests a higher rate of return relative to the initial investment. However, IRR has some limitations, such as potential multiple solutions (in the case of unconventional cash flow patterns) and sensitivity to reinvestment rate assumptions. As a result, it is often used in conjunction with other metrics, such as the multiple on invested capital (MOIC), to provide a more comprehensive analysis of an investment's performance.