hard · Private Equity & LBOs
An analyst uses the 'Kaplan-Schoar PME' (KS-PME) to evaluate a fund.
If the sum of discounted distributions is $250M and the sum of discounted contributions is $200M (using a public index as the discount factor), what does the resulting 1.25 ratio imply?
- The fund outperformed the public market by 25% on a cash-flow-matched basis.
- The public market outperformed the fund by 25%.
- The fund returned 1.25× the original capital invested.
- The fund generated a 25% net IRR.
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