MOIC (Multiple of Invested Capital)

Multiple of invested capital (MOIC) is the ratio of total value returned or expected to be returned by a fund to the total capital invested, expressed as a number (for example, 2.5x). It is a time-agnostic performance measure that shows how many times over the original investment a fund has returned, without regard to how long that return took to achieve.

How it works

MOIC is calculated by dividing total value (cumulative distributions plus current residual NAV) by total invested capital (cumulative LP contributions). The result is a simple multiplier: a fund that invested GBP 100M and has returned GBP 180M in distributions plus holds GBP 70M in residual portfolio value has a MOIC of 2.5x (GBP 250M / GBP 100M).

MOIC is most useful when paired with IRR. On its own, MOIC says nothing about timing: a 2.5x return over four years is dramatically better than a 2.5x return over twelve years in terms of the annualised return (IRR) delivered to LPs. But IRR alone can be misleading in the opposite direction: a short-duration investment that doubles quickly has a high IRR but a low MOIC, whereas a longer-duration investment with a high MOIC may show a more modest IRR. Together, MOIC and IRR provide a complete picture of how much value was created and how fast.

In private fund reporting, MOIC appears in several forms depending on the treatment of fees and carry. Gross MOIC is the multiple on invested capital before management fees and carried interest, measuring portfolio-level value creation. Net MOIC is the multiple on capital actually contributed by LPs, after fees and carry have been deducted from distributions. GPs typically quote gross MOIC in track record presentations and marketing materials; LPs care about net MOIC.

For fund administrators, MOIC is calculated from two inputs: cumulative called capital (from the capital account records) and total value (distributions already paid plus current NAV). Both must be accurate for MOIC to be meaningful. Because MOIC uses contributed capital (not committed capital) as its denominator, the metric evolves as capital is called over time. Early in a fund's life, high MOIC figures can be misleading if only a small portion of committed capital has been invested and early investments happen to be performing well.

Worked example

Northwood Capital Fund III has the following position at its Year 5 reporting date:

Total LP commitments: GBP 300M. Total contributed capital to date: GBP 255M (85% called). Cumulative distributions paid to LPs: GBP 120M. Residual portfolio NAV: GBP 310M. Total value (distributions + NAV): GBP 430M.

Gross MOIC (fund level, before fees and carry): GBP 430M / GBP 255M = 1.69x.

After management fees and carry, net distributions to LPs total GBP 101M and net residual NAV (after carry reserve) is GBP 261M. Net MOIC: (GBP 101M + GBP 261M) / GBP 255M = GBP 362M / GBP 255M = 1.42x.

The fund administrator produces both gross and net MOIC in the quarterly LP report, alongside IRR, TVPI, DPI, and RVPI for each LP and the fund in aggregate. Individual LP MOIC may differ slightly from fund-level MOIC for LPs who joined at subsequent closes (and therefore have different contribution dates and equalisation adjustments).

Frequently asked questions

What is the difference between MOIC, TVPI, and multiple on money (MoM)? MOIC and multiple on money (MoM) are the same metric with different names. TVPI (Total Value to Paid-In) is functionally identical to MOIC: it divides total value (distributions plus NAV) by paid-in capital. Some LPs and data providers use TVPI; others use MOIC or MoM. All three are calculated the same way. The terminology varies by manager, jurisdiction, and convention; PE funds in the US more commonly use TVPI, while European managers often use MOIC.

What is a "good" MOIC for a private equity fund? Institutional PE buyout funds have historically targeted gross MOICs of 2.5-3.5x over a five-to-seven year holding period. Top-quartile funds achieve 3x or above on a net basis. Funds returning below 2x net (i.e. less than double LP capital) are generally considered to have underperformed. VC funds have wider distributions: top performers can achieve 5-10x or more on a portfolio basis, while median VC funds frequently return below 2x. Private credit funds typically target lower MOICs (1.3-1.6x) reflecting their lower risk profile and shorter duration.

Can MOIC be calculated for individual investments rather than the whole fund? Yes. GPs routinely report investment-level gross MOIC in track record presentations and LP reports, alongside the fund-level MOIC. Investment-level MOIC is the ratio of total proceeds received or expected from a specific portfolio company to the capital invested in that company. It is a useful diagnostic for identifying which investments drove fund performance and for assessing the GP's investment selection track record.

Why does MOIC change over the fund's life? MOIC changes as new capital is called (increasing the denominator), as investments are realised (increasing cumulative distributions and removing NAV), and as portfolio valuations are marked up or down (changing residual NAV). Early in a fund's life, MOIC fluctuates more because smaller denominator changes (additional calls) and denominator-relative NAV changes produce larger swings. Mature funds approaching full realisation show more stable MOIC as the denominator is fixed and only distributions and residual NAV remain to move the figure.

Related terms

IRR, TVPI, DPI and RVPI, J-curve, Capital account, NAV, Distribution waterfall, Vintage year

Related pages

Performance reporting for private fund administrators, Swelv for fund administrators