Paid-in capital
What is Paid-in capital?
Paid-in capital is the cumulative capital an investor has contributed to a private fund under calls or equivalent funding arrangements.
Paid-in reporting should reconcile every contribution with calls and distinguish investment, fees, expenses, equalization, bridge repayment, and recallable amounts. A later classification update should preserve the original cash movement and explanation rather than rewriting transaction history without an auditable adjustment.
Subscription facilities can delay investor calls and change reported cash-flow timing without changing when the fund invested.
Investor-level paid-in can differ from fund totals after transfers, equalization, fee arrangements, and class-specific allocations. Reporting should identify the level and never combine investor and fund denominators in one performance ratio.
What it measures
Paid-in capital records investor cash funded, usually including amounts for investments, fees, and expenses under the reporting definition. It differs from commitment, which includes unfunded obligation, and from invested cost, which can exclude fees or amounts not deployed into portfolio companies. Provider definitions must be aligned before comparing ratios.
Cash-flow classification
A contribution is a negative investor cash flow for IRR and becomes the denominator in common multiples. Calls can be returned quickly, offset, equalized, or later deemed recallable. Transfers and secondary purchases complicate whether a new investor inherits historical paid-in amounts for reporting or records only purchase consideration and assumed obligations.
Relationship to NAV and distributions
Paid-in capital is not current value. The fund may have distributed proceeds and retain residual NAV. TVPI compares distributions plus NAV with paid-in capital, DPI compares distributions, and RVPI compares residual value. These ratios need the same denominator, currency, and date to reconcile meaningfully.
Bridge financing and timing
Subscription facilities let a fund invest before calling LP capital, so economic deployment can precede paid-in cash. This can improve reported IRR by shortening investor cash duration while adding interest and facility risk. Multiples are less sensitive to timing but still reflect financing cost and the treatment of fees.
Practical reporting
Reconcile opening paid-in, contributions, offsets, transfers, recallable distributions, reclassifications, and closing balance. Separate commitment funded from cash paid if equalization or netting applies. Compare manager statements with bank records and notices. Do not calculate unfunded as commitment minus paid-in without checking recycling, release, recall, and amendments.
Also known as: contributed capital, drawn capital
Sources and further reading
- ILPA Reporting Template, Institutional Limited Partners Association
- Investments in Private Capital: Equity and Debt, CFA Institute