PE Valuation: Gross IRR

[Alexander James]

Dear All,
Reading 46, Alternative Investments. Page 77
How do I get the Cash Flows for the Gross IRR .. looking at the table on page 76, I don’t get the CFs on page 77.
I would greatly appreciate any help.
This topic was already discussed, but was unable to retrieve the link to the answer.
Many thanks
A.J.

 

[Kiakaha]

The gross IRRs appear to be the operating results for that year, minus the capital called down in the NEXT year. eg for 2002: operating result is -15, then subtract the capital called down in 2003, 10, you get the -25 in the table.
Problem is, I have no idea why. Anyone else got any ideas??

 

[cpk123]

if so…
For the Net IRR - cash flows are net of fees and Carried Interest
2001 -50 (Called Down)
2002 -15 (Called Down) - 1 Mgmt Fees of 2001 -5 (Op Results of 2001) = -21
2003 -10 -1.3-15 = -26.3
2004 -25-1.5+25=-1.5
2005 -10 -2 +45 -3.84 (Carried Interest) = +29.16
2006 -5 -2.2 + 55 - 6.79 = 41.01
2007 105 (Op Results) -2.3 (Mgmt fees) -11.18 (Carrie Int) = 91.52
Use above - calculate IRR = 11.3%
Gross IRR -> No fees, No Carried Interest
2001 -50 (Called Down)
2002 -15 (Called Down) -5 (Op Results of 2001) = -20
2003 -10 -15 = -25
2004 -25+25=0
2005 -10 +45 = +35
2006 -5 + 55 = 50
2007 105 (Op Results)
Gross IRR=16.1%
IRR calculated by entering all these using the Cash flows function.

 

[Kiakaha]

Cpk that’s how I would have thought it would work but if you look at the cash flow table on p77 that’s not what they have done….Their numbers for gross IRR cash flows are different to yours. And the net IRR numbers are right, but a year out. (eg they have -50 in 2000, not 2001).

 

[cpk123]

This is how it was when I did level II in 2009… not sure how the book shows it now …. and do not have access to that either.