easy · Private Equity
A $500M fund uses a 'Subscription Credit Line' to bridge its capital calls. It buys an asset for $50M in Year 1 using the credit line and only calls the capital from LPs in Year 2 to repay the bank.
What is the most likely impact of this maneuver on the fund's reported performance metrics?
- Lower IRR, lower MoIC
- No change to either metric
- Higher IRR, same MoIC
- Higher MoIC, same IRR
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