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In 2009 ILPA's 'Private Equity Principles' divided opinion among both LPs and GPs. While its latest initiative – reporting standardisation – won't please everyone, it's certainly attempting to do so.

Last year, a story made the rounds in the private equity industry that a US buyout group was so frustrated by the Institutional Limited Partners Association's “Private Equity Principles” that during a management meeting, some of the firm’s executives put on a skit lamenting the “LP-centric” guidelines by performing a satirical song to the tune of “YMCA”.

Now, ILPA has released a follow-up to the guidelines by publishing the first of five reporting standardisation templates intended to streamline and simplify performance reporting in the industry. We're not sure if anyone is dreaming up skits this time around, but we do know that once again, opinion is divided on how helpful the proposed measures will actually be.

The first template deals with capital call and distribution notifications. On one sheet of paper, ILPA has attempted to anticipate and address many of the main questions LPs ask fund managers after receiving a capital call or distribution notification.

In the past, GPs could expect a slew of phone calls from LPs requesting further information. The notification process sometimes becomes a major “back office headache”, as one source said, given that different LPs may request different types (and varying degrees) of information.

The template suggests GPs regularly provide details on things like the unfunded balance prior to current notice; impact on unfunded balance; cumulative LP amount including current notice; and LP total net amount called/distributed.

ILPA has called for feedback from the industry on the template, which has already raised some concern from managers.

Some GPs believe the template requires too much information to be provided for every capital call, or every distribution, burdening GPs to compile data that would be better reserved for quarterly reports. Including larger amounts of information in every capital call or distribution notification could also prove taxing for LPs, especially institutions that are light of resources, some GPs said.

Given the diversity of private equity funds and investors, a one-size-fits-all reporting approach is perhaps less than straightforward. ILPA is sure to receive both positive and negative feedback on its templates, which it admits are a “starting point from which other templates can be evolved”, but the initiative will hopefully help make reporting more facile and effective. This goes for not only the well-established LPs and GPs at the forefront of these efforts, but those newer entrants into the asset class who will have the benefit of joining an industry already using the methods that work best for everybody – GPs and LPs alike.

The key question now is how quickly and widely the templates will be adopted. ILPA has no formal way of enforcing them so it's down to the industry to embrace the methodology voluntarily. More specifically, it's the LPs swinging behind it and demanding universal adoption that will enable the new framework to become the industry standard.

In so doing, LPs may well encounter some GP resistance, articulated musically or otherwise. When that happens, they must persist. “Use the template” must become the LP mantra, played back to the GPs over and over  – like a broken record.