LPs demand detailed annual meetings

The annual meeting is increasingly becoming a crucial event for limited partners, and LPs are pushing for more of a role in dictating the agenda and what kind of information is shared. GPs have been scrambling to accommodate their investors, according to panelists at the PEI Investor Relations & Communications Forum Wednesday.

“Our meeting is only two days long and we jam so much in. There are so many funds to cover. LPs want to hear more from our senior guys and hear about their projections. It’s a real challenge to figure out how much is enough information,” said Nancy Palleschi, senior vice president of global conferences and events for The Carlyle Group.

Annual meetings have evolved in the wake of the global financial crisis, and are no longer about gifts to LPs, flashy entertainment and generalities. LPs want private equity executives to drill down the numbers.

“The last couple of years, the whole thing has changed,” said Richard Waddington, CEO of First Protocol. “Now LPs are looking for details, information. They want to look GPs in the eye and ask ‘how is my fund doing?’”

Our meeting is only two days long and we jam so much in. There are so many funds to cover. LPs want to hear more from our senior guys and hear about their projections. It's a real challenge to figure out how much is enough information. Nancy Palleschi

Meaningful access to members of the investment team is also critical to LPs. “Make sure your executives are there and are ‘present,” not just out on their BlackBerrys,” said Waddington.

Panelists agreed that technology plays an important role in how information is delivered and LPs are driving that change as well.

The Carlyle Group, for example, has been allowing annual meeting attendees to email questions during GP presentations.

“People don’t ask questions at the Q&A [sessions]. We want to provide a way for people to ask questions anonymously. LPs like it and are asking for it,” said Nancy Palleschi, senior vice president of global conferences and events for The Carlyle Group.

In the wake of the financial downturn, LPs have in general been pushing for more transparency and more information from their managers, in part because the LPs themselves must meet reporting requirements. One delegate who is a member of a large buyout firm said during a separate panel the firm received 100 requests for information from LPs in June 2008, and 1000 LP information requests in June 2009.

“Get used to the lack of privacy. It’s only going to get more invasive,” said Alison Cole, vice president of investor relations at CCMP Capital Advisors. Cole made the remarks Wednesday during a panel at the PEI Investor Relations & Communications Forum.

Many of the additional information requests stem from interest in the health of portfolio companies.

“We see an increase in demand for portfolio company information. They want to see reports, the financials and they want information online,” said Daniel Whelan, vice president at Platinum Equity, a Los Angeles-based buyout firm.

LPs are making no apologies for their requests. “We have hundreds of GP relationships and we ask for everything. We have to. We’re only as good as the GPs we invest in,” said Deirdre Whann, marketing manager at HarbourVest Partners.