medium · Investment Banking ma-lbo
A sponsor performs a Dividend Recapitalization. They issue 400 million of new debt to pay a one-time dividend.
If the original equity investment was 1,000 million and the company is still held by the sponsor, what is the immediate impact on the IRR and MOIC?
- Both IRR and MOIC are unchanged
- IRR increases; MOIC is unchanged
- IRR decreases; MOIC increases
- Both IRR and MOIC increase
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