The Institutional Limited Partners Association has launched a fee transparency initiative aimed at getting private equity firms to adopt more uniform reporting practices.
In a Thursday statement announcing the initiative, ILPA said senior investment and reporting professionals from a cross section of investor institutions and advisers will produce industry guidance on reporting and transparency.
The ILPA represents 300 member organizations with more than $1 trillion in private assets globally. Organizations involved in the initiative include money managers, consultants and pension funds such as the $292.9 billion California Public Employees’ Retirement System, $173.2 billion Florida State Board of Administration and $108.9 billion New York State Teachers.
ILPA CEO Peter Freire noted several factors that led to this point, including more regulation of private equity firms that prompted investors to introduce custom formats, “which has exacerbated the compliance challenge and made benchmarking program costs and net performance more difficult,” Mr. Freire said in a statement.
James Maloney, spokesman for the Private Equity Growth Capital Council, applauded the ILPA initiative. "Favorable alignment of interests and transparent partnerships between investors and fund sponsors are key parts of the private equity model,” Mr. Maloney said in an e-mailed statement. “We hope to continue a positive dialogue with ILPA on transparency and other issues.”
A proposed reporting template is being developed, and the first draft will be made available to ILPA members for comment in late September. Comments will be welcomed from the wider industry, including fund managers and advisers, beginning in mid-October, and a final version will be released in early January.