- ILPA announced phase II of its private equity transparency initiative
- Group launched standardized reporting form for GPs in Jan. 2016
- Intends to roll out additional reporting guidelines throughout 2017
The Institutional Limited Partners Association began Phase II of its initiative to increase transparency in private equity reporting this week.
The crux of this effort, a standardized template for disclosing fees, expenses and carried interest, was introduced in January 2016. Now, the trade group hopes to increase adoption of the template and establish best practices for implementing it.
“The idea is that the more lessons can be exchanged within the community, the faster we can increase the rate of adoption [and] the faster we’ll achieve the ultimate goal, which is not just standardization but digitization of the transfer of this data,” said Jennifer Choi, ILPA’s managing director for industry affairs.
Choi told Buyouts the template has not been substantively changed since it was launched. “The only thing that we did between then and now was to publish in October of last year some definitional clarifications” based on frequently asked questions and included in the template under a tab.
“The template itself has a level of detail that, as we understand it, was not being provided in most of the standard disclosure packages,” Choi explained. “Even if the information was being made available, it was in a different place in almost every report,” making it difficult to put together aggregated statistics or draw overall conclusions. “The issue was a lack of consistency.”
Choi said LPs had given “serious thought” to how much to invest in the internal infrastructure necessary to digest all the data now available. As ILPA works toward releasing new guidance and recommendations in 2017, one area of interest is which answers are essential, now that so many questions can be asked.
From GPs, Choi said, “the feedback continues to evolve. When the template was first released, we did hear it was going to require, not unexpectedly, a meaningful amount of effort on the part of the GP to bring their workflow, their systems in line.” Since then, “we understand there’s been a lot of progress made.”
She added that the template “simplifies the compliance process” for GPs. ILPA says more than 160 managers are now completing it for their LPs.
Action Item: Read the Phase II report here: http://bit.ly/2oe47ws
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