hard · Private Credit fund-structures-returns-economics
A direct lending fund, Meridian Credit Partners, manages a portfolio with $1,000,000,000 in gross assets, financed with $500,000,000 of equity and $500,000,000 of fund-level debt at a cost of SOFR + 200 bps. The gross asset yield is 11.5%, and SOFR is 4.5%.
If the fund charges a 1.5% management fee on gross assets and no incentive fee for this period, what is the net return on equity (ROE) before credit losses and expenses?
- 10.0%
- 15.0%
- 13.5%
- 12.0%
Sign up free to see the explanation and track your rank →
More Private Credit fund-structures-returns-economics practice
- What is the Dividend Coverage ratio?
- If management achieves a 6.0x Money Multiple (MOIC) on their personal investment, while th
- A BDC (Business Development Company) is required to distribu… — What is the primary benefi
- What is the fund's TVPI (Total Value to Paid-In) multiple?
- An investor is reviewing a fund's performance and sees a DPI… — What does this suggest abo
- What is its current Debt-to-Equity (Leverage) ratio?
- If the fund's net TVPI is only 1.15×, what is the most likely explanation?
- A GP is managing a fund with a 'European' (whole-fund) water… — How much carried interest