Definition
What is RVPI (Residual Value to Paid-In)?
Unrealised fund value — the manager's NAV mark on remaining holdings divided by paid-in capital. Complement to DPI.
Residual Value to Paid-In (RVPI) measures the unrealised portion of a fund's total value — the manager's net asset value (NAV) mark on remaining portfolio holdings divided by total paid-in capital. Together with DPI, RVPI sums to TVPI.
Calculation: - RVPI = Residual NAV / Paid-In Capital. - TVPI = DPI + RVPI.
Why RVPI is the "soft" metric: NAV is the manager's own valuation of the residual portfolio. For listed-equity holdings the mark is reliable (market price). For unlisted holdings, the manager applies a valuation methodology that combines comparable-company multiples, discounted cash flow analysis, recent transaction data, and judgement. Managers under pressure to show strong interim performance can mark portfolios optimistically — and the optimism is not directly testable until exits occur.
Industry standards mitigate but don't eliminate this: - International Private Equity Valuation Guidelines (IPEV) provide standardised methodology. - Audited financial statements require auditor sign-off on NAV. - LP advisory committees in some funds get visibility into individual valuations.
But the structural reality remains: RVPI is opinion until it converts to DPI.
How sophisticated LPs interpret RVPI: - Vintage-adjusted — younger funds (years 1-3) are dominated by RVPI; mature funds (years 8-12) should be dominated by DPI. - Concentration check — if a single portfolio company drives most of RVPI, the fund's outcome depends heavily on that one investment. Diversified RVPI is more comfortable. - Recent mark trajectory — RVPI moving sharply upward in the absence of follow-on financing rounds is a warning sign of aggressive marking. - Exit comparison — when a fund exits a portfolio company, the realised exit value compared to the prior NAV mark reveals the manager's valuation discipline.
Wholesale Investor NZ context: the planned historical returns DB (ROADMAP #21) would track DPI / RVPI / TVPI across all NZ wholesale funds where data is available, enabling cross-manager comparison previously unavailable.
Related Terms
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.
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.
IRR (Internal Rate of Return)
The annualized return on an investment accounting for the timing of cash flows.
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.
Before making any investment decision, you should seek independent advice from appropriately qualified professionals. Wholesale Investor does not recommend or endorse any particular investment, strategy, or fund manager.