Definition
What is MOIC (Multiple on Invested Capital)?
The total cash returned to an investor divided by the cash they invested — a simple money-multiple measure of investment success.
Multiple on Invested Capital (MOIC) is a money-multiple metric — total distributions plus residual NAV, divided by total capital invested. It is the simplest performance measure for closed-end funds and individual deals.
Calculation: - MOIC = (Total Distributions + Residual Net Asset Value) / Total Invested Capital. - A MOIC of 2.0x means the investor received 2× their invested capital back. - A MOIC of 1.0x means break-even (got back exactly what they invested). - A MOIC below 1.0x means partial loss.
Worked example: LP invests NZ$10M into a PE fund. Over 8 years, fund distributes NZ$15M cash and the residual portfolio NAV is NZ$8M. - MOIC = (15 + 8) / 10 = 2.3x.
Strengths: - Intuitive — anyone understands "you got 2× your money back". - Doesn't depend on holding period — useful for comparing deals across different timeframes. - Doesn't need a discount rate assumption.
Weaknesses: - Ignores the time value of money. A 2.0x MOIC in 5 years is materially better than a 2.0x MOIC in 15 years; MOIC alone cannot distinguish them. - For ongoing funds (open-ended / evergreen), the "residual NAV" component depends on the manager's valuation methodology, which may overstate or understate fair value.
Why used alongside IRR: MOIC and IRR are complementary. MOIC tells you "how much"; IRR tells you "how fast". A fund showing MOIC 2.0x and IRR 18% means roughly 4-5 year hold; the same MOIC with IRR 10% means 7-8 year hold.
Industry conventions: NZ private equity LP reports typically present gross MOIC (before fees) and net MOIC (after fees). The difference between gross and net is the fee drag; for a fund running 2% management + 20% carry, expect 30-50 basis points per annum difference between gross and net.
Related Terms
IRR (Internal Rate of Return)
The annualized return on an investment accounting for the timing of cash flows.
TVPI (Total Value to Paid-In)
Identical conceptually to MOIC — total fund value (distributions + residual NAV) divided by paid-in capital.
DPI (Distributions to Paid-In)
Realised cash returns from a fund — distributions actually paid divided by paid-in capital — the hardest metric of fund success.
Private Equity (PE)
Investment in established private companies through buyouts, growth capital, or restructuring.
Educational Content Disclaimer
This glossary provides general educational information only and does not constitute financial, legal, or tax advice. Definitions and explanations are simplified for educational purposes and may not cover all aspects or nuances of each term.
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