Glossary

Terms frequently used in NAXS’ documentation or in the private equity industry

Buyout

A sector of the private equity industry, where the investment strategy is to purchase a controlling interest in a company.
Carried Interest

The share in the capital gains of a private equity fund which is allocated to the general partner. Typically, a fund must return the capital given to it by limited partners plus any preferential rate of return before the general partner can share in the profits of the fund.
Cash per share

Cash & cash equivalents in relation to the number of shares.
Cash & cash equivalents

Cash, bank and short-term investments.
Co-investment

The direct investment by a limited partner alongside a general partner in a portfolio company
Commitment

The (maximum) amount that a limited partner agrees to invest in a fund.
Equity per share

Equity in the relation to the weighted number of shares.
General Partner (GP)

A class of partner in a limited partnership. The general partner retains liability for the actions of the partnership. In the private equity world, the general partner is the fund manager. The general partner earns a management fee and a percentage of profits (see Carried interest)
Investment level

Private equity fund investments in relation to net asset value.
IRR (internal rate of return)

The interest rate at which a certain amount of capital today would have to be invested in order to grow to a specific value at a specific time in the future.
J curve

A concept that during the first few years of a private equity fund, cash flow or returns are negative due to investments, losses, and expenses, but as investments produce results the cash flow or returns trend upward. A graph of cash flow or returns versus time would then resemble the letter “J”.
Leverage

The use of debt to acquire assets
Limited partner (LP)

An investor in a limited partnership.
Limited partnership

A legal entity composed of a general partner and various limited partners. The general partner manages the investments and is liable for the actions of the partnership while the limited partners are generally protected from legal actions and any losses beyond their original investment.
Management fee

A fee charged to the limited partners in a fund by the general partner, or the fee charged to investors in a fund of funds by the manager.
Net asset value

The fair value of total assets less net debt (corresponds to equity).
Net debt/Net cash

Cash and cash equivalents, short-term investments and interest-bearing current and long-term receivables less interest-bearing current and long-term liabilities.
Outstanding fund commitments

Remaining commitment to private equity funds.
Portfolio company

A company that has received an investment from a private equity fund.
Preferred return

The minimum return per annum that must be generated for limited partners of a private equity fund before the general partner can begin receiving a percentage of profits from investments.
Private equity

Equity investments in non-public companies, usually defined as being made up of venture capital funds and buyout funds.
Private equity fund investments

Fair value of investments in private equity funds.
ROI (return on investment)

The proceeds from an investment, during a specific time period, calculated as a percentage of the original investment.
Total assets

All assets and liabilities not included in net debt or net cash, which is the same as the Balance Sheet total, less asset items included in net debt or net cash and less non-interest-bearing liabilities.
Total exposure to private equity fund investments

Fair value of investments in private equity funds and outstanding investment commitments.
Vintage

The year that a private equity fund begins to make investments on behalf of those investors.