The LP Collusion Canard
Back in 2008, Dow Jones reported that a group of large institutional investors had formed a lobbying group to collectively press for more LP-friendly fund terms. The story was later refuted by some of the reported participants (one Canadian pension plan rep called it “poppycock”), but not before I wondered if such an effort could be viewed as a form of collusion. Fast forward to last week, when Private Equity International’s David Snow raised the “C” word in reference to the ILPA guidelines drafted last fall. This was followed up yesterday by WSJ scribe Peter Lattman, who reported that “at least three large private equity firms have retained outside counsel to examine potential antitrust issues.” In other words, some general partners believe in an LP cartel, with the ILPA guidelines being used as the preferred means of intimidation. Let us count the reasons why they’re wrong:
