DPI

DPI (Distributions to Paid-In Capital) measures the ratio of cash actually distributed to Limited Partners against the capital they deployed into a fund. A DPI of 1.5x means investors received ₹1.50 for every ₹1 invested. Unlike TVPI, which includes unrealized gains, DPI reflects only realized returns—money in the bank.

DPI is calculated as: Total Distributions ÷ Paid-In Capital. A fund with ₹100 crore raised and ₹150 crore distributed has a DPI of 1.5x. This metric matters because it answers a simple question: did the fund actually return cash, or are gains still locked in portfolio companies?

Seasoned LP networks in India track DPI religiously during fund evaluation. A DPI above 1.0x signals the fund has returned capital and begun generating true profit. Below 1.0x, the fund is still deploying or sitting on unrealized gains. Most institutional LPs target 1.2x+ DPI before committing to follow-on funds from the same manager.

Indian PE/VC funds report DPI alongside TVPI under SEBI Alternative Investment Fund guidelines. SEBI's 2012 framework requires AIFs to disclose distributions quarterly to LPs. However, many mid-market Indian funds still lack consistent exit velocity—exit timelines stretch 7–10 years versus global 4–5 year benchmarks. This extends DPI realization cycles.

Regulatory nuance: Indian fund managers often hold stakes in portfolio companies post-growth stage, delaying full distributions. Founder exits via secondary sales or IPOs (like Zomato, Nykaa) generate sudden DPI jumps. Tax considerations under Schedule VI of Income Tax Act also influence distribution timing—some funds stagger exits to optimize LP tax brackets.

Benchmarking: India-focused VC funds typically see DPI of 0.8–1.2x after 5 years; PE funds targeting 0.6–0.9x (longer hold periods). A 1.5x+ DPI within 7 years is considered strong for Indian mid-market funds.