More data please

Both the Institutional Limited Partners Association and several large firms have backed a new database that will provide LPs with additional information on funds.

Limited partners looking for increased transparency regarding the funds and investments of general partners will soon have access to a new database that covers some of the industry’s largest private equity firms.

A group of GPs including Kohlberg Kravis Roberts, The Carlyle Group and Apollo Global Management agreed in April to contribute transaction and fund information to the database, which is being developed by the Private Capital Research Institution and Harvard Business School professor Josh Lerner.

“When you think about some of the questions that limited partners would want [answered], getting dispassionate high quality research going will make a big difference,” says Lerner. “There a number of people LPs on our advisory board who have been quite supportive.”

The initiative is not the first example of LPs successfully gaining increased access to GP information. In recent months, efforts have been made to address their desire for greater transparency.

The Institutional Limited Partners Association in February selected consultant Cambridge Associates to create its own custom-tailored data: an ILPA-specific benchmark that will focus solely on the private markets investment performance data of funds in which ILPA members have invested.

Better benchmarking has been a repeated issue for LPs who have a hard time accurately measuring performance.
“We’re in an industry where the benchmarks suck,” Erik Hirsch, chief investment officer at consultancy Hamilton Lane, said in January. “LPs can’t distill the information uniformly or consistently to tell who is best of breed; it’s almost impossible. Every firm is top quartile.”

Before launching the new benchmark with Cambridge, ILPA executive director Kathy Jeramaz-Larson expressed the institution’s support for the PCRI database, which has been in development since late 2010.

“With more data and reports being generated on the subject, [the database] will provide the opportunity for that [knowledge] gap to diminish,” Jeramaz-Larson said at the time. “We support transparency in the asset class between institutional investors and general partners, and for the most part, both groups are data oriented.”