INVESTING/PORTFOLIO STRATEGIES

CalPERS among large investors endorsing private equity fee reporting template

CalPERS announced Friday officials at the $278.4 billion pension plan have endorsed the Institutional Limited Partners Association's new fee reporting template and they intend to request that its private equity fund managers comply with the reporting practices.

The practices in the new reporting policy issued Friday includes quarterly reports disclosing fee changes and balances and other details at the individual limited partner level on a year-to-date basis and since inception. Included in the list of items to be reported include management fees and any offsets, partnership expenses, and carried interest paid and accrued. It also seeks quarterly reporting of such money paid to fund managers including fees not subject to offsets and fees collected by affiliates or other related parties. The reporting practices also request managers on a quarterly basis to disclose any regulatory examinations and the results of the examinations.

"We welcome the release of this template and I commend ILPA for their work,” said Ted Eliopoulos, CalPERS chief investment officer, in a news release. “Adoption of the template by all limited partners is an important step toward bringing uniform reporting to the private equity industry.”

The California Public Employees’ Retirement System, Sacramento, had a $27.1 billion private equity portfolio as of Wednesday and a 10% strategic target allocation to private equity. CalPERS currently has about 100 private equity general partnership relationships, said Megan White, CalPERS’ information officer. Pension fund officials plan to reduce that number to 30 private equity manager relationships by 2020, Ms. White said.

As of Wednesday, about 23 institutional investors have endorsed the template including the $186.1 billion California State Teachers’ Retirement System, West Sacramento; 293.9 billion Swedish kronor ($34.2 billion) AP2, Gothenburg, Sweden; and $175.6 billion Florida State Board of Administration, Tallahassee, according to an ILPA announcement.

Some 25 private equity managers expressed support for the new template. Among the firms that have endorsed the template are Pathway Capital Management, Carlyle Group and TPG.