Defining a standard

The Institutional Limited Partners Association (ILPA) unveiled the first part of its long-awaited second round of reporting guidelines in the form of templates last month. ILPA executive director Kathy Jeramaz-Larson speaks to PEI about the details behind the new guidelines, the role GPs played in developing them and what the next round of guidelines will look like.

Private Equity International: Can you give me some background on ILPA and how the organisation came about?

Kathy Jeramaz-Larson: I started with the organisation in 2007. Prior to that, it was 15 years that the organisation operated in a relatively unstructured function. About three or four years prior to me joining, ILPA held conferences and did some LP outreach. We wanted to focus on education and we rethought the mandate. For the past four years we have been enhancing our education, networking and researching capabilities. Our latest initiative, of course, is the new reporting guidelines.

PEI: Why did ILPA decide to issue these new reporting guidelines?

KJL: The first set of guidelines was issued in 2009 and it was indicated at this time that ILPA was not finished. The new round of guidelines came about after we were soliciting GPs that were unable to comment on the first round. We had a roundtable meeting in February last year with GPs and LPs and out of that we were encouraged to take the ILPA’s ‘Private Equity Principles’ and get more explicit about expectations. We had four working groups. They went out to a number of GPs and this round of guidelines came out of those comments. 

PEI: Are the new set of guidelines final or is there a comment period to be followed by revisions? 

KJL: They will be updated as necessary, but this is the document. My expectation would be to make amendments through appendices, but we expect any revisions to be minor. 

PEI: Why was the timing right for the new guidelines?

KJL: The need for LPs and GPs to better communicate about expectations and practices is still there. The guidelines are really meant as a way to spark dialogue about terms. And there was a need to expand on the first set released in 2009. 

PEI: How closely did ILPA work with GPs when creating the new guidelines? 

KJL: There were a number of folks that made comments when the first round of guidelines came out in 2009. There were others that came from relationships with LPs. They came around in various different ways. For the most part we got positive feedback from GPs. A one-size-fits-all approach does not work: each LP and GP would have to have their own discussions together and the guidelines accelerate those discussions. The GPs also wanted more structure around the items: there was a lot of cooperation on their part. 

PEI: How do you plan to enforce the guidelines? Will it primarily be LP pressure? 

KJL: So far they have been used as a conversation piece. Some LPs like all of them, and use them as a checklist, while some don’t. We don’t enforce the guidelines, because we can’t. We are not privy to the conversations between LPs and GPs.

PEI:  Why did you decide to focus on capital calls and distributions for the first set?

KJL:That was decided from the working groups with GPs. It seemed like a good place to start. It was also decided by the LPs, of course. LPs were interested in information about distributions and capital calls being reported in a simple, structured manner. 

PEI: ILPA noted that the capital call and distribution templates are the first of five sets of templates. When will the next four sets be released? 

KJL:We are planning to review the templates at our LP conference in March. Also, we need to review them with GPs that would want to see them. I’m hoping in April or May, the remaining guidelines will be released.

PEI: And what will the templates include?

KJL: We’re still scoping that out, but the templates will likely address quarterly and annual reporting.