Definition
DPI
DPI (Distributions to Paid-In) measures how much cash a fund has actually returned to its investors relative to the capital they paid in.
DPI = total distributions / paid-in capital. It is the 'cash-in-hand' measure: a DPI of 1.0x means the fund has returned all the capital LPs put in, and anything above that is realised profit. Unlike TVPI, DPI ignores unrealised paper value, so it cannot be inflated by optimistic marks.
LPs increasingly focus on DPI, especially in downturns when paper valuations (in TVPI) may not convert into real exits. A fund with high TVPI but low DPI has gains on paper that it has yet to turn into distributions.
Related terms
- Internal Rate of Return (IRR)IRR is the annualised, time-weighted return on an investment that accounts for the timing of cash flows.
- TVPITVPI (Total Value to Paid-In) is the ratio of a fund's total value — realised distributions plus remaining holdings — to the capital LPs have paid in.
- Distribution WaterfallA distribution waterfall is the order in which a fund's proceeds are split between LPs and the GP.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.