The Institutional Limited Partners Association (ILPA) has launched the Fee Reporting Template, which builds upon ILPA’s reporting guidelines first issued in 2011 and is the first deliverable of the ILPA’s Fee Transparency Initiative launched in May 2015.
The Template marks the industry’s first attempt to unify and codify the presentation of fees, expenses and carried interest information by fund managers to Limited Partners (LPs).
Consultation on the Template has been ongoing since September 2015 and ILPA is pleased to announce broad- based support and input from more than 120 individuals and organisations, including nearly 50 global LP groups, and 25 General Partner organisations (GPs), as well as numerous industry trade bodies and a number of leading consultants, advisors, fund administrators and accountants.
“The range of practitioners and organisations that have been engaged in this process is testament to ILPA’s commitment to a consensus-based approach to both transparency and standardisation.”
“ILPA’s new reporting standards, as illustrated by the Fee Reporting Template, will provide our members with the clarity and consistency of information required to perform their duties, while giving GPs a more consistent roadmap for what Limited Partners need,” says Tanya Carmichael, ILPA’s Chair and Director, Global Funds at Ontario Teachers' Pension Plan (OTPP).
Starting in spring 2015, the ILPA convened groups of members to discuss the quality of GP reporting and the need for enhanced reporting standards and additional guidance on disclosures. This dialogue evolved into consensus amongst a cross-section of dozens of practitioners to create and implement the Fee Reporting Template. The Template, proposed as an expansion of the quarterly Partners Capital Account Statement, details at the Limited Partner level all monies collected by fund managers from LPs and portfolio companies, including fees charged, fund expenses, any offsets applied, carried interest amounts and income received through related parties or parallel vehicles to the fund.
“This is a momentous and necessary step forward for our industry. The ILPA is calling for transparency and consistency that helps ensure a level playing field,” says Peter Freire, ILPA’s CEO. “The institutionalisation of improved reporting will take time but we hope to see meaningful progress over the coming year in the adoption of the reporting standards for new funds being raised and ideally for current vintages as well.”
“The release of the Template is the first step in a broader process,” adds Freire. “In the coming year ILPA will carry this dialogue forward through forums that develop additional guidance on the Template’s implementation, including the exploration of subsequent revisions or clarifications necessary to ensure the widest adoption possible. This is very much in line with ILPA’s mission to develop and advance best practices for limited partners and the wider industry.”
In addition to the Fee Reporting Template, the Initiative has produced a white paper recommending an expanded role for third parties and Advisory Boards with respect to fund compliance reviews, as well as recommended guidance to be appended to the ILPA Private Equity Principles, last updated in 2011. Both documents will be published in February. ILPA will undertake a comprehensive review of the ILPA Private Equity Principles beginning later in 2016.
