CFOs formalize investor reporting

A significant minority of private fund firms have put in place some form of formal process for managing limited partner information requests, a poll of delegates at Thursday's Private Equity International CFOs and COOs forum in New York found.

Speaking at the event, chief financial officers and compliance officers said they are spending much more time fielding requests for information, which meant a more formalized approach was required.

“We now track every question and have created a database of answers, and make this new information available in our quarterly LP reports,” one CFO said.

A second CFO said their firm had done something similar, but added it was becoming increasingly challenging as the firm's pool of investors grew.

“Different investors have different reporting requirements, they want their data in various formats,' the CFO said.

Investor information requests can also vary depending on the type of investor and even their geographical location.

“Middle Eastern investors tend to be the least demanding, and Asian investors are almost information consumers. Those in Europe lie somewhere in the middle,” one of the CFOs said.

A second added public pension plans demanded a lot of information, whereas family offices, which are often not in the spotlight, have fewer reporting requirements.

The lack of standardization of requirements was a recurring theme during the discussion. But the panelists were reluctant to adopt the Institutional Limited Partners Association standardized LP reporting template.
Of the delegates polled just 12 percent said they would adopt the template in full, while more than a third – 36 percent – said they will not be using it.

“It would be a huge financial burden for us to adopt the template, we are a small firm, and still you get one investor asking if we can provide the template plus this, and a second investor wanting a modified version of the template. It just doesn't work,” one CFO on the panel said. “If we were to adopt it we would be looking at increasing our infrastructure to do so, costs that could end up being passed on in management fees.”

A second said their firm had taken the decision to adopt a modified version of the template.

“We see the template as a guide, we can pick and choose the aspects of it we want to use and do other things in our own way,” the CFO said.