ILPA’s great reveal

The LP body has issued the last of its reporting templates intended to standardise GP reporting. The templates could bring great benefits to the industry, but universal adoption is no certainty.

The Institutional Limited Partners Association, which represents a large portion of the LP universe, has completed its initiative of improving performance reporting to investors.

Despite the progress the industry has made in recent years, many LPs believe there is still a ways to go and that the industry lacks consistency in terms of the quality of reporting. Depending on the managers, reporting may be scant and at worst misleading in some cases. Other complaints include too much detail and clunky formats, which LPs cannot easily process.

GPs on the other hand feel increasingly burdened by the demands of investors, with constant requests for updated fund valuations, portfolio data and the like.

Both sides agree that if the industry adopts the new practices stipulated by ILPA, significant improvement will be the reward.

If the templates get universally adopted, both sides stand to benefit. LPs get the information they require in a format they can handle. And the GPs can report to all of their investors in the same way, instead of having to produce customised reports for individual clients.

The association has worked with both LPs and GPs to create reporting templates that are meant to standardise and simplify the way performance data is packaged and presented to the investors. ILPA intends for the templates to allow GPs to record, in simple format, the majority of data points LPs look for from their managers.

If the templates get universally adopted, both sides stand to benefit. LPs get the information they require in a format they can handle. And the GPs can report to all of their investors in the same way, instead of having to produce customised reports for individual clients.

The obvious caveat  is that universal adoption is not a given. It would require for many participants in either camp to change the way they do things. Some will deem such change painful. Others will grumble that what the ILPA templates are calling for is more complicated and cumbersome than the established procedures they are meant to replace. 

As always, the templates are not mandatory and ILPA has no way of enforcing adherence. Voluntarism is the only way forward. Much will depend on a sufficiently large number of LPs insisting on the templates being used, and exclusively so.

If this happens then consistent reporting in private equity, elusive for so long, could at last become a reality. Given how much work has been done to get this far, optimism seems in order. But now that the templates have been published, their boosters really need to put their shoulders into persuading the market to embrace them.