Private equity firms reporting two IRRs (Internal Rate of Return) when an IRR is enhanced by subscription credit facilities, face the scrutiny of whether this is an accurate measure of performance. Amy Lynch, FrontLine’s Founder and President, states that the SEC has provided some direction to PE firms through its exam results and public statements. The regulator has stated that if the use of credit facilities affects a fund IRR, then its impact on IRR must be disclosed to investors on the materials containing IRR. See PEI Private Funds CFO (subscription required), “The contentious art of reporting two IRRs”
