Are PE Firms Living Up To The ILPA Principles?
It's been nearly one year since the Institutional Limited Partners Association (ILPA) released a set of "best practices" for structuring private equity funds. This was hardly the first attempt to better align interests between GPs and LPs, but is the one that seems to have prompted the most discussion among market professionals. In preparation of the anniversary, market research firm Preqin decided to examine whether the principles are having a tangible effect on fund structure. The results were decidedly mixed. Preqin examined all funds of 2009 and 2010 vintage, including those in market and many that actually launched before the ILPA principles were released last September. Yes, that last part is a major methodological flaw -- particularly since its includes around three-quarters of the analyzed funds -- but the research still gives a good reflection of where things stand today.
