LPs are looking for proactivity, transparency and accessibility from their fund managers, panellists said in the keynote discussion of Private Equity International’s Investor Relations, Marketing & Communications Forum: Europe on Wednesday.
Richard Moore, managing director of Campbell Lutyens, said his firm has gathered feedback from market participants in recent years; based on this, there are five key things that LPs look for from their fund managers when making investments.
“Firstly, it’s the proactiveness – so, really being on the front foot with the LP communications… Being able to get things out to investors before they’re asking for it,” he said. “Secondly, it’s accessibility.”
Thirdly, he noted that IR professionals knowing the ins and outs of their portfolio is key for instilling confidence in LPs. “The fourth thing is not being overly pushy with LPs… The best IR teams can picture themselves in the LP’s shoes. I think really building that empathy into your communication strategy is key.”
The last factor is transparency, Moore said. “Being open and being candid.”
Other panellists agreed with Moore’s summary. Nicole Downer, managing partner at MV Credit, told delegates that proactivity and transparency are vital in building strong relationships between LPs and their fund managers. “Especially when you’re in a credit kind of asset class, the news is always bad news,” she said. “So, you want to give that [news] early and you want to give that clearly, so that by the time something happens, there is no surprise.”
Amanda Tonsgaard, head of investor services and communications at Triton Partners, noted that transparency is especially key as private markets is such a data-driven industry. “What we’re doing [at Triton] is reporting [on all our] KPIs to all our investors, and that means we can’t manipulate and choose what data we’re going to show.”
Within this environment, there are several strategies that can offer additional clarity, like co-investing for example. “What I like about [co-investment] is it enables investors to look under the hood,” Tonsgaard said. “I don’t think it’s going to go away.”
Part of the challenge in today’s crowded fundraising market, the panellists said, is differentiating yourself from the countless other firms knocking on investors’ doors. Having a compelling strategy, an established team and being honest with LPs is the best way to make a good start.
“It’s really important to be transparent, it’s really important to be proactive, and it’s really important to treat your investors as you want to be treated yourself,” said Downer.