In TeX's math mode, individual letters are treated as separate variables. That's why you're getting the four letters in "TVPI" spaced apart so far (with the gap between V and P being especially large).
To make TeX/LaTeX treat "TVPI" as the name of a single variable (and, by the way, typeset the text in the numerator and denominator as upright text rather than in math italics), you should use code along the following lines:
\documentclass{article}
\usepackage{amsmath} % for \text macro
\newcommand{\TVPI}{\textit{TVPI}} % set acronym in text-italics mode
\begin{document}
\begin{equation}
\TVPI=\frac{\text{Distributed capital}}{\text{Paid-in capital}}
\end{equation}
\end{document}

If you prefer an upright-roman rather than italic look for the variable name, you should use \textnormal instead of \textit. Happy TeXing!