PE Basics

Question 1

Internal rate of return

Answer 1

The Internal Rate of Return (IRR) is the annualized rate of return generated by an investment. 15 -25%

Question 2

Distribution to paid in

Answer 2

Measures the amount of capital returned to investors relative to the amount of capital they have contributed.

Question 3

Multiple on Invested Capital

Answer 3

Measures the total return on an investment, expressed as a multiple of the original investment.

Question 4

Paid-In Capital

Answer 4

This refers to the actual amount of capital that has been contributed by investors to date. The difference between committed and paid-in capital reflects how much capital the fund has yet to call from its investors.

Question 5

Carried Interest (Carry)

Answer 5

This is the share of the profits that the fund managers receive, typically around 20%, after the fund has returned the invested capital

Question 6

Preferred Return (Hurdle Rate)

Answer 6

Minimum rate of return that the fund must achieve before the general partners (GPs) are entitled to receive their share of carried interest.

Question 7

What is article 6, 8 and 9 under and why

Answer 7

under regulatory guidelines sustainable ones. These classifications help investors understand how funds approach sustainability and ESG (Environmental, Social, and Governance) factors.

Question 8

Article 6

Answer 8

Basic disclosure about how sustainability risks are considered.

Question 9

Article 8

Answer 9

Funds that promote environmental and/or social characteristics but do not have sustainable investing as their core objective.

Question 10

Article 9

Answer 10

Funds with a specific sustainable investment objective