How is ILPA seeking to expand?
The ILPA is at a pivotal point in its evolution. Until recently, ILPA took a quiet approach to expanding its footprint in the market. Since my coming on board we've been much more vocal about who we are and marketing ourselves more broadly.
ILPA originated as a supper club. It was incorporated about five years ago but had very limited infrastructure, and was focused primarily on member-only conferences. Then about a year and a half ago the board felt that it should really take a more active role seeking other LPs, because of the overall maturation of the asset class. When they brought me on, they committed more resources to expanding the team. I now have a team here which allows us to provide additional services to the membership. We can also be more vocal in marketing our benefits to our global partners.
We now have a director of education, who will be building out the educational platforms for the membership. I have a director of research whose focus is to build a solid foundation of analysis and research to measure returns, develop benchmarks, track capital flows. We are also focused on our growing conferences. We have our two members-only conferences in the spring and the fall, and we have a GP-LP summit in the fall. We will start to focus more on regional events.
We are also being more proactive with membership recruitment – going out to regions and explaining to LPs what we do. Not everybody is aware of what the ILPA does.
What new resources are you focussed on for ILPA members?
Among the ILPA's members are a lot of funds that have large private equity allocations but small teams. What the ILPA can do is try to alleviate some of the work that they do. So for example the ILPA has developed a best practices and standards guide, sponsored customised research, developed proprietary data, and tools to assist members with their investing challenges. For an issue such as FAS 157 [a fair value accounting rule from FASB], where there are some implications for LPs, we were able to bring in experts to discuss with the LPs what they needed to be aware of, what kind of timetables they needed to adhere to, and what kinds of things they needed to get training on.
We are also working on getting clearer benchmarking figures.
Could ILPA become a force for changing terms and conditions in private equity
One of the clear benefits of a members-only conference is that there are a lot of one-off discussions. The LPs have a chance to sit together in a confidential environment and talk about some of the issues that are impacting them, which could well be issues relating to negotiating terms with one of the GPs. Quite often the discussion goes like, “Do you know this group? What's the good, the bad and the ugly about this group? How can you help me?”
However, these LPs are also competitors. Generally, these LPs are looking to get into deals, and what one LP may find tough to deal with, another LP might be okay. The LPs will do what they need to do to get the due diligence on a fund that fits within their allocation strategy. We've got members lists, so they can pick up the phone and call other members, they can go to the GP summit to meet with GPs. But they do not look to ILPA as a standardising entity. They are better equipped to assess the skills and capabilities of a management team than are we.
Are there plans to open ILPA up to LPs in other asset classes, like real estate and hedge funds?
Not at this point, no. We're just getting started in meeting the needs of the private equity professional.