Private equity firms are relying on the Institutional Limited Partners Association’s reporting template to make reporting easier as the demand for transparency from limited partners increases.
More than half (55 percent) of respondents said a handful of their larger institutional investors ask them to provide ILPA reporting, and a further 15 percent said the majority of their investor reporting uses standard ILPA frameworks.
During a panel at Private Equity International’s CFOs & COOs Forum 2019, one chief financial officer explained that a desire for greater transparency leads some LPs to spend a significant amount of time at the firm going over their books.
“I would say 30 percent of our LPs are spending three hours on back-end office deep dives,” he said.
Another CFO said he is taking care of LPs’ need for clearer reporting by fully implementing the ILPA’s reporting template.
“In our fund area, just to take the issue off the table we found we can automate the ILPA template. If anybody asks for it, [we] send the automated template,” the CFO said. “I never get any questions about it. It helped because if someone sends me their own template, we can say ‘No, we have the ILPA template’ and they would say ‘Fine.’”
The CFO fully integrated the template for the firm’s last two funds and says it saved lots of time that would have otherwise been spent working through reporting methods that work for both sides.
The ILPA released its reporting template in 2016 and has since had 26 GPs publicly endorse it.