medium · Private Credit & Debt fund-structures-returns-economics
A $500M direct lending fund uses 1.0× fund-level leverage (borrowing $500M to hold $1B in assets). The gross asset yield is 10%, the cost of leverage is 6%, and management fees are 1.5% on gross assets.
What is the approximate net return to the LP equity (ignoring credit losses and incentive fees)?
- 14.0%
- 8.5%
- 11.0%
- 7.0%
Sign up free to see the explanation and track your rank →
More Private Credit & Debt fund-structures-returns-economics practice
- What is the fund's TVPI (Total Value to Paid-In) multiple?
- What is the Dividend Coverage ratio?
- What is its current Debt-to-Equity (Leverage) ratio?
- A BDC (Business Development Company) is required to distribu… — What is the primary benefi
- An investor is reviewing a fund's performance and sees a DPI… — What does this suggest abo
- If the fund's net TVPI is only 1.15×, what is the most likely explanation?
- If management achieves a 6.0x Money Multiple (MOIC) on their personal investment, while th
- What is the Sponsor's Money Multiple (MOIC)?