AUM vs Capital deployed vs Fund size
I often see on PE and other investment firms webpages the following data points:
- Various raised fund sizes (Fund 1, Fund 2, Fund 3, etc.)
- Capital deployed
- AUM
- Committed capital
- Total capital allocation
1) I understand fund size, that's just how much equity they have raised from LPs for each of their funds.
2) Would capital deployed be how much of the raised funds have been deployed (I.e. the equity the PE has contributed) or does capital deployed include spending from debt/leverage?
3) Should AUM be the same as capital deployed? Or is AUM basically capital deployed adjusted for the current market valuation? Does AUM represent the PE funds equity stake in the assets or does account for 100% of the asset value / include the debt/leverage?
4) Committed capital no idea
5) Total capital allocation no idea
Could someone please explain the differences, mainly interested in the first 3 thanks.
Hi Prospect in IB - Gen, any of these topics helpful:
More suggestions...
Fingers crossed that one of those helps you.
bump
Fund Size: Correct, this is the total amount of capital commitments raised by the Fund. Though it varies by firm, I would also generally say this excludes co-investment/joint venture capital. Firms generally don’t disclose as many details about Co-investment capital because co-investors generally have better fees, better terms, etc.
Deployed Capital: This is generally the “amount of equity capital deployed into investments.” In particular, this differs from the amount of capital raised or called, because (1) private equity funds generally don’t call 100% of commitments (usually ~95% in case they need emergency reserves or come across a unique opportunity, I.e. COVID) and (2) private equity funds can leverage subscription lines of credit to fund investments in a timely manner and then call capital from investors later.
AUM: In my experience, this defined as total assets (equity + financing), plus any uncalled capital commitments. I feel like this metric is the most widely varying of the bunch and you will almost always see footnotes next to AUM in any marketing material. Firm-wide AUM will usually include JV/SMA/Co-Invest AUM.
Committed Capital: This one is confusing. This is similar to deployed capital, but i would define it as the “equity capital committed to investments.” By ways of an example, if you buy a company for $100 but use a subscription line to cover $90, then (at the time of the investment) your committed capital is $100 and deployed capital is $10.
Total Capital Allocation: I’m not helpful on this one, sorry.
I would add one last important one to know:
Called Capital: The amount of capital actually called/contributed by investors. As said above, this is usually ~95% at the end of the fund’s commitment period.
I will definitely make the exclaimer that there are different ways of defining all of these.
I apologize, I wrote this on my phone and the formatting came out obscenely. This makes me cringe and I feel like I need to remake the above in word, just to reformat again... :)
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