DPI Is the Only Number LPs Care About Now, So Some GPs Are Gaming It
Cash back to investors, not marked-up paper gains, has become the metric that decides whether a manager raises its next fund.
NEW YORK, August 28, 2026. Distributions as a share of net asset value have stayed below 15% for four straight years. That's according to Bain & Company's Global Private Equity Report 2026. Bain calls it an industry record. The 2025 figure landed at 14%, a level not seen since the 2008-09 financial crisis. Roughly 32,000 unsold private equity-backed companies remain sitting in portfolios. Average holding periods have stretched toward seven years.
Limited partners have noticed. Coller Capital's Summer 2026 Global Private Capital Barometer surveyed 108 LPs. Together they manage $2.045 trillion. 54% expect the number of zombie funds in their own portfolios to increase over the next two years. That's up from 48% who already reported holding zombie funds back in 2024. Their preferred fix is a fee step-down, not liquidation.
That frustration has changed which metric moves LPs. DPI, distributions to paid-in capital, has risen to rival MOIC in importance. Bain, StepStone's 2026 PE GP Outlook, and McKinsey's 2026 Global Private Markets Report all confirm the shift. IRR still nominally leads as the headline number funds market themselves on. But its primacy has narrowed sharply since 2019. LPs want to know what came back in cash, not what a fund says its unrealized positions are worth.
That shift has created an obvious incentive to manufacture DPI rather than earn it. NAV loans and dividend recapitalizations let a sponsor generate a distribution without selling anything. Dividend recap volume rose 128.8% in 2024, then another 22.8% in 2025. It fell roughly 49% year over year in the first quarter of 2026. An ILPA webinar found more than 60% of LPs still preferred a conventional exit over these workarounds. Their complaint is specific. A DPI figure that blends real asset sales with recap-funded distributions and continuation-vehicle proceeds tells an LP less than it appears to. That's true unless a fund discloses the mix.
The two facts sit next to each other uncomfortably. LPs have made cash-on-cash returns the number that decides whether they commit to a manager's next fund. Some of that cash is now being financed rather than earned, out of portfolio companies that haven't found a buyer. A metric built to cut through marked-to-model fiction is at risk of collecting a different kind of fiction instead. The industry hasn't settled on how LPs are supposed to tell the difference.