pfm’s top five of 2016

ILPA publishes fee reporting template

The Institutional Limited Partners Association (ILPA) has published the final version of its fee reporting template, which provides a standardized way for GPs to share fee information with investors.

“ILPA is hoping that the template will be adopted as an industry standard in the coming years,” a spokesperson for ILPA told pfm.

The template is designed to supplement ILPA’s existing quarterly reporting standards by adding new sections on GP compensation and miscellaneous items like clawback obligations, as reported by pfm.

Since then, more GPs have publically-backed the template, with nine saying they will use it from early 2017. These include Blackstone, KKR and The Carlyle Group – see the latest on this here.

Leonard Green fund terms revealed

The terms of the fund, which is targeting $8.5bn and is nearing a final close, are disclosed in documents prepared for LACERS.

Leonard Green & Partners plans to commit 4 percent of aggregate commitments to its latest fund, Green Equity Investors VII, according to documents from Los Angeles City Employees' Retirement System (LACERS).

Two sources familiar with the fundraising said that the fund will soon hold a final close on nearly $10 billion. The fund's target was raised to $8.5 billion at the beginning of the year, while the hard-cap was set at $9.1 billion.

Its predecessor, Green Equity Investors VI, closed in 2012 on $6.25 billion.
LACERS has agreed to commit $25 million to Fund VII, which began raising in the autumn, according to LACERS documents detailing the fund's terms prepared by consultant Portfolio Advisors.

First Reserve pays $3.5m over fee allocations

The private equity firm – which has been charged with allegedly allocating expenses to funds without telling its LPs – has also reimbursed investors more than $7m.

Private equity firm First Reserve Management has agreed to a $3.5 million settlement with the Securities and Exchange Commission, according to an SEC filing.

The regulator charged the firm, which focuses on energy investments, with allegedly allocating expenses to funds without telling investors.

Funds involved in the allegations include, First Reserve Fund X, First Reserve Fund XI, First Reserve Fund XII, First Reserve Fund XII-A Parallel Vehicle, and First Reserve Fund XIII.

Some of First Reserve’s LPs in those funds include the California Public Employees' Retirement System, the California State Teachers' Retirement System, the Minnesota State Board of Investment, the Canada Pension Plan Investment Board, the Arizona State Retirement System and the third Swedish National Pension Fund, according to PEI data.

South Korea relaxes fundraising rules

South Korea has made reforms to regulation around private funds in order to reduce restrictions for managers.

After much deliberation, the South Korea government amended its Financial Investment Services and Capital Markets Act (FSCMA) in order to make it easier for managers to raise funds in the region.

The act, which came into effect late last year, is expected to have a significant impact on the number of private fund investments made in South Korea, particularly impacting real estate investments that are made via private funds.

The reform introduced the “private collective investment vehicles for professional investment”, which allows companies to invest in funds comprising of any type of asset.

Prior to the reforms, the FSCMA restricted fund managers investment strategies by classifying private fund types into separate areas, such as real estate, securities and special asset funds depending on the primary targeted investment asset. In the case of real estate funds, for example, the scope of items accepted as real estate investments was severely restricted.

PE bonus expectations plunged in 2015

Private equity professionals were expecting an average bonus of about £104,000 ($153,000; €141,000) – or 71 percent of their average annual salary – in 2015, according to a survey of London-based workers by recruitment firm Astbury Marsden. The figure represents a dramatic 28 percent decrease compared to the £145,625 in bonus compensation expected by respondents 2014’s survey.

Conducted in September and October of last year, the annual survey asked more than 1,000 people working in London, primarily in the financial services sectors, whether or not they were expecting a bonus in 2015 and what they expected that bonus to be.

The 2015 edition of the survey, published late last month, revealed that not only were London-based private equity professionals expecting smaller bonuses in 2015 than in 2014, but only 80 percent of private equity respondents expected to receive bonuses at all, compared to 100 percent in 2014.