MOIC for CLO Investing funds

Based on the most helpful WSO content, MOICs (Multiple of Invested Capital) for funds investing in mezzanine and equity can vary significantly depending on the strategy, market conditions, and the specific fund's performance. However, here are some general insights:

1. Mezzanine Investments: Mezzanine financing typically targets returns in the range of 12-14% coupons, often combined with equity kickers like warrants or PIK interest. While MOICs for mezzanine investments are generally lower than pure equity investments, they can still achieve solid multiples, especially when structured effectively.

2. Equity Investments: Equity investments in CLO (Collateralized Loan Obligation) funds or similar vehicles can have higher MOICs due to the higher risk and potential upside. For private equity funds, achieving a 2x MOIC is often considered a baseline, with top-performing funds targeting 3x or higher.

3. Carry Implications: The value of carry depends heavily on the fund's ability to hit or exceed its MOIC targets. For example:

   • If a fund achieves a 2x MOIC, the carry pool will reflect that baseline performance.
   • If the fund hits a 3x MOIC, the actual cash carry paid out could double compared to a 2x assumption, significantly increasing the value of carry for principals and partners.

It's important to evaluate the fund's historical track record and its ability to consistently deliver on these MOIC targets. Additionally, factors like fund size, deal structure, and market conditions will influence the ultimate returns and carry payouts.