Performance
Investment Performance Management
In the context of investment performance management WKH have developed a transparent, consistent, and fair reporting and performance measurement framework per industry standards.
Performance Metrics
- Internal Rate of Return (IRR): The most widely used metric, IRR calculates the annualized effective compounded return rate that can make the net present value (NPV) of all cash flows (both positive and negative) from a particular investment equal to zero.
- Multiple of Invested Capital (MOIC): Also known as the Total Value to Paid-In (TVPI) ratio, MOIC is used to measure the total value returned to investors relative to the total amount of capital invested.
- Distributions to Paid-In (DPI): This ratio measures the amount of cash distributions returned to the LPs relative to the paid-in capital.
- Net Asset Value (NAV): NAV represents the current value of a fund's assets minus its liabilities and is important for understanding the fund's current worth.
Reporting Standards
- Fair Value Accounting: Following accounting standards such as US GAAP or IFRS, investments are typically reported at their fair value, which requires regular appraisal and adjustments to reflect the current market conditions.
- Quarterly Reporting: WKH provides LPs with quarterly reports detailing the fund’s performance, including updates on investments, capital calls, distributions, and key financial metrics.
- Annual Audited Financial Statements: WKH will provide annual financial statements audited by an independent accounting firm to ensure accuracy and transparency.
Transparency and Communication
Transparent Communication is foundation of WKH work culture, WKH provides LPs with regular, detailed communication on fund strategy, market conditions, portfolio company performance, and risk management. This includes the success & growth path and highlights any challenges and strategies for underperforming investments.
Legal and Regulatory Compliance
Ensuring compliance with regulations in jurisdictions where the funds operate, including those related to disclosures, fees, and conflicts of interest, is crucial for maintaining LP trust and meeting fiduciary responsibilities.
Alignment of Interests
Fee structures (management fees and carried interest), co-investment opportunities, and GP commitments to the fund are designed to align the interests of GPs and LPs.Adherence to these standards and practices helps maintain a robust, transparent, and efficient market for private equity and venture capital investments, benefiting both GPs and LPs by fostering trust and promoting long-term success.
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