LP Collaboration or LP Collusion?
Last Friday, I wrote about how LPs were gaining some leverage on their mega-fund GPs, after years of being the weaker sister. Today, Dow Jones reports that a group of large institutional investors – representing over $100 billion in PE assets under management -- have formed a lobbying group to collectively press for more LP-friendly fund terms. These include GIC, AlpInvest, Canada Pension Plan and Ontario Teachers’ Pension Plan. I’ve long supported such an organization in theory, believing that LPs too often give away the store to greedy GPs (particularly in terms of transaction fee splits). But I’m immensely curious as to why no U.S. systems – particularly CalPERS and CalSTRS – are involved. The DJ article cites a group member as saying that “U.S. public pension plans lacked the resources to contribute to such a network.” Sorry, but that simply does not hold water. CalPERS, for example, has the resources in terms of both personnel and money. It also holds more cachet among U.S. buyout firms than do either GIC or AlpInvest, or at least more PR value when political attacks arrive. So let me throw out something else: Could there be a fear of collusion?
