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Raising the bar: Reflections on ILPA template

Shashi S and David AA Ross of Viteos Fund Services reflect on the ILPA reporting initiative and propose technological solutions… 

Increased investor appetite for private equity thanks to outperformance is encouraging institutionalisation of the industry. Against this backdrop the Institutional Limited Partners Association’s (ILPA) reporting template is gaining steam as it aims to deliver standardisation.

However, the absence of an integrated blend of technology with services stymies private equity’s uptake of technology and digitisation in this area, without the right combination the widespread implementation of the new template is likely to be slow.

The industry needs help with this hefty undertaking. A blend of technology and services is needed to keep up with asset growth and institutional reporting demands.

Eamon Devlin, managing partner of MJ Hudson in London, acknowledges transparency – especially around fees – has been a weak area. 

“Times are changing thanks to ILPA, but LPs are still, from some managers, struggling to obtain full transparency about the breakdown of the monies that are being paid to managers in deal fees, or closing fees, for example,” says Devlin.

Key considerations for technology

An optimal solution will be able to:

Integrate modules of portfolio information with investor reporting seamlessly by handling complex fund structures and multiple investment vehicles across all tiers

Capture raw data, feed it upstream, and consolidate in the same form and structure that allows investors and managers to perform analysis, make comparisons and benchmark accordingly

Meet all reporting needs related to portfolio, fees, GP or LP and, cope with portfolio and operational processes, such as the ILPA template

Handle all of the complex private equity accounting practices including waterfalls, clawbacks and escrows

Be scalable and flexible, able to accommodate material changes to the manager’s operating structure (changes in structure, or fee terms, in addition to the lifecycle: commitment, investment phase and liquidation)
 
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