medium · Private Equity pe-core
A PE fund uses a 'Subscription Credit Line' to fund an investment for 12 months before calling capital from LPs. The investment generates a 2.0x MOIC over 4 years (total hold).
How does the use of the sub-line affect the reported Net IRR compared to the Gross IRR?
- Net IRR increases by approximately 100-200 bps
- Net IRR decreases due to interest expense
- MOIC increases modestly while IRR stays roughly flat
- There is essentially no measurable impact on the fund's IRR
Sign up free to see the explanation and track your rank →
More Private Equity pe-core practice
- If the GP receives a 20% carry on the profit from Deal A immediately, and the fund eventua
- Following the investment, what is the investor's ownership percentage in the company, assu
- What is the Interest Coverage Ratio?
- A private equity firm is calculating a 'Public Market Equiva… — If the KS-PME score is 1.1
- A sponsor provides an 'Equity Cure' to a portfolio company. What is the standard purpose o
- What is the new effective conversion price for the growth equity investor?
- Which company will report a higher 'Gross Margin' and a higher ending 'Inventory' value on
- What is the company's Interest Coverage Ratio?