After identifying gaps in its reporting guidelines released last year, LPEQ has released a revised set of reporting standards for the listed private funds sector.
Listed fund of funds for example now have more bespoke reporting guidelines. A spokesperson for LPEQ said this was because the valuation process was different for fund of funds, which rely on direct managers' reporting, when explaining their valuation process to investors.
Publicly traded funds of funds don't have to report the value of every underlying investment, but should nonetheless evaluate the valuation processes of each fund in the portfolio, according to the guidelines. Similarly, when reporting realisations and exits, it is far more meaningful to give information on what has a material impact on the private equity fund of funds firm as opposed to granular information on all the underlying investments.
It's completely different to typical private equity reporting.
For example a ‘could’ that appears on the guidelines for the first time is articulating the fund's policy on responsible investment. A ‘should’ is disclosing material write-offs.
The spokesman added that the additional clarity is crucial for LPEQ members who want compliance with the guidelines to “be a badge of honour”. He added the guidelines do not represent the bare minimum needed but should be aspirational for listed private equity companies.
The spokesman went on to say that traditional reporting guidelines, such as those released by IPEV, don’t account for listed private equity; so it’s important that this subset of private equity has its own formalised standards.
“It’s completely different to typical private equity reporting,” he said. “Just the nature of the relationship between a limited partner in a private agreement and public shareholders is different. They can come and ask you anything and you can tell them without it really reaching the public; whereas if a public market shareholder wants certain information, you cannot disclose this in private, it must be made public.”