Understanding Distribution to Paid-In (DPI) in Private Equity

DPI, or Distribution to Paid-In, is a method of sharing profits between a company's shareholders. DPI is applicable to both listed and unlisted companies, and is considered one of the most commonly used management instruments.

IPR, also known as Return on Capital Employed (ROCE ), is a technical term used to describe the amount of distributions that can be made to shareholders by the company. These distributions are generally not taxable on shareholders, although certain restrictions apply when IPR is paid.

IPR is calculated by comparing the total amount of investments paid by shareholders with the value of the shares at the end of the accounting period. Shareholders are then entitled to withdraw up to a certain percentage of their investments through the IPR. This can be done in the form of dividends, stock options or share buybacks.

IPR is seen as a possible source of liquidity for companies, and can be used to remunerate employees and board members. IPR also enables shareholders to recoup their investment, and more and more companies are turning to IPR to make investments or distributions.