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Australian PE industry ready for ILPA template

AVCAL CEO tells Private Equity International that it plans to respond to ILPA’s draft fee reporting template as the industry body lobbies for government reforms to incentivise superannuation funds to focus on net returns not just absolute fees.

Australia’s private equity industry is well placed to meet the reporting standards described in the new fee reporting template drafted by the Institutional Limited Partner Association (ILPA), said Australian Private Equity and Venture Capital Association Limited (AVCAL) chief executive officer Yasser El-Ansary.

The template, released in late October for consultation, is part of ILPA’s Fee Transparency Initiative and aims to standardise the way general partners report on a wide range of costs including advisory fees, broken deal expenses, director fees, monitoring fees, organisational costs, placement fees and capital market fees, as reported by Private Equity International.

AVCAL will be responding to the ILPA consultation on the template, El-Ansary said. The consultation closes on 11 December with the goal to produce a final template by the end of January.

“Australia is already very well positioned on reporting, and we have a high degree of consistency across our industry. GPs have been providing comprehensive information to LPs for some time,” El-Ansary said.

Australia also has a “sensible approach” to regulation, which ensures a balance between prescriptive rules that are indicative of some markets, against letting the market decide what is important in terms of corporate governance and transparency, El-Ansary noted.

“At some point the disparity between some markets will have to be eliminated. The industry has an obligation and responsibility to ensure this happens,” he said.

However, in Australia the regulatory framework places too much focus on absolute fees, whereas in other markets you see an equal focus on net returns and fees, he noted.

The Australian private equity industry has been vocal in advocating for government policy reforms to incentivise superannuation funds to focus on net performance returns for their members, rather than just lowering fees. Encouraging greater investment in an asset class like private equity will help to achieve that, El-Ansary added.

“It is very important that all markets around the world improve both the transparency and consistency of fee reporting. It’s a global race for capital allocation, and we need to do everything possible to position private equity to win,” El-Ansary said.