Fair value is hot topic at ILPA event

Attendees at the exclusive Institutional Limited Partners Association conference in Austin, Texas are debating the issue of valuation standards and ‘comparing notes’ on funds in the market, according to a source at the event.

The issue of fair value accounting has emerged as the hottest topic at the Institutional Limited Partners Association conference, currently being held in Austin, Texas.

According to a source at the ongoing event, delegates to the LP-only conference are debating to what extent the private equity industry has embraced – and should embrace – fair-value accounting standards, including a set of valuation guidelines put forth by the Private Equity Industry Guidelines Group and recently officially endorsed by the ILPA.

The ILPA is a trade organisation for more than 130 institutional LPs from nine countries. The group estimates that its members represent nearly $300 billion (€228 billion) in private equity capital.

The association, formalised in 2001 as a forum for discussion among LPs, meets twice per year. This year’s event is being hosted by the University of Texas Investment Management Company and held at the luxury Barton Creek Resort.

The source said that one contingent of delegates is arguing in sessions that much of the private equity industry already effectively practices fair-value accounting or is close to doing so. Other participants feel true compliance with this standard is far away. The event has drawn roughly 100 participants.

The event also features a series of roundtable discussions at which LPs may “compare notes” on private equity funds currently in the market. “Outside of these conferences, there really isn’t a forum for LPs to do this”, said the source.

Last September, the ILPA elected Mark Wiseman of the Ontario Teachers’ Pension Plan as the association’s new chairman, taking over from Richard Hayes, the former head of alternatives at the powerful California Public Employees’ Retirement System. Hayes is now a managing partner at Oak Hill Capital.

In 2003, ILPA named Arlett Tygesen, of the Ontario Municipal Employees Board of Administration, as the association’s first-ever executive director.