Knowledge Base: Financial Sponsors

“Financial Sponsors” include¬†private equity firms, hedge funds, sovereign wealth funds, and pension funds. These firms raise capital from outside investors (Limited Partners) or get capital from employees or governments and then invest it with the aim of earning a profit and distributing these profits to the investors, employees, or governments.

At large investment banks banks, the Financial Sponsors Group covers these firms and advises on deals such as debt and equity issuances and transactions involving their portfolio companies.

To analyze financial sponsors, you need to understand their key metrics, such as assets under management (AUM), “dry powder,” fee-related earnings, TVPI (Total Value to Paid-in Capital), DPI (Distributions to Paid-in Capital), and RVPI (Residual Value to Paid-in Capital). There are more examples in our coverage of private equity funds of funds.

We don’t yet cover Financial Sponsors in a full course on the site, but you can find a few tutorials on the topic below: