Very Simple question - AUM
Hi guys,
I'm very much confused with the definition of AUM.
Let's suppose a private equity raised $1B fund and it's the only fund that the company has. They have invested in $2B project using addtional $ 1B senior loan, but the control of the project belongs to the private equity. And.. after a few years, the asset had gained its value and became $3B( $2B in equity size, and $1B in debt).
In that case, what's the AUM ?
should I say the company has a AUM of $1B(initial equity investment size), $2B(initial project size), or $3B(value of the total project marked to market) ??
Thanks.
//www.wallstreetoasis.com/forums/pe-question
From the recent FAQ (and see my recent posts I just added, because the first page and a half of comments were all wrong).
The AUM will be $2B, because that's the current value of the private equity fund's investment.
The capital commitments to the fund are $1B (this is NOT the AUM, again, see my posts at the end of the thread linked to above). The total historical value of portfolio companies is $2B. The current value of portfolio companies is $3B. And AUM is $2B. All 4 of these numbers have been used in marketing materials and/or websites; but there actually is a correct definition for AUM and by it the AUM is $2B in your example.
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