The Institutional Limited Partners Association has just published a template for quarterly portfolio company reports, a significant step in its efforts to streamline GP/LP communications.
The template, issued in the last month, is intended to cover the type of information both GPs and LPs believe is important about realised and unrealised investments, including fund ownership percentage, total invested, current cost, reported value (and changes to valuations), realised proceeds and internal rates of return.
Other checklist information includes detailed statistics about the portfolio company, period changes in valuations, LP ownership percentage and internal rate of return since inception.
Reporting has been an area of concern for LPs, with complaints over the quality and amount of information shared. By the same token, GPs are increasingly burdened with data requests from investors, many of whom will want different bits of information presented in different ways. The template is an admirable effort to consolidate all these requests into one place, and simplify it into a checklist-style form.
The template won’t cover every possible request, of course, as ILPA executive director Kathy Jeramaz-Larson accepts. But it’s a start. “The GPs can point to this and say, ‘as long as we do this, we should be covering your requirements’,” Jeramaz-Larson says. “There could be LPs with unique requirements that would require some data points not captured here, but for the most part, if GPs could start reporting to LPs consistently, it would save them time and money.”
ILPA determined the information that should be included in the checklist by working with both GPs and LPs on what exactly they were looking to accomplish with their quarterly reports. GPs especially had a strong voice in the creation of the template, with some firms making their chief financial officers available to provide input into the process.
“We’ve had a lot of eyes look at this and provide us with their comments, and we put it out for a six-week comment period, so we could try and get everybody’s views on this,” says Kathy Jeramaz-Larson, executive director of ILPA.
But she also hopes that this isn’t the end of the story. The next step, she says, is to make the whole process digital – thus making life even easier for GPs. Not too much to hope for, surely.