MMG | December 14th, 2015 | http://www.middlemarketgrowth.org
Last week, the Association for Corporate Growth submitted written comments to the Institutional Limited Partners Association on its proposed Fee Reporting Template.
ILPA created the template with the goal of increasing transparency between general partners of private equity funds and their limited partner investors by capturing “greater detail on fees, expenses and incentive compensation paid to GPs and their affiliates,” according to ILPA’s website.
In its letter to ILPA, ACG expressed concern that the proposed template would require private equity general partners to provide a broad range of information, some of which may not be applicable for small and midsize fund managers and could require additional accounting systems or tools.
“ACG is concerned that the proposed template takes a ‘kitchen sink’ approach that asks private equity firms to provide an extremely broad range of information, much of which may not be meaningful,” said the letter from ACG Global President & CEO Gary LaBranche.
ACG noted the time required to complete the information requested on the template in its current form may present a substantial burden to smaller fund managers; it recommended that ILPA adopt a more targeted approach focused on the information that limited partners value most.
The proposed template is tied to ILPA’s stated mission of increasing transparency between GPs and LPs and aligning the interests of the two groups. According to its website, ILPA sought to design a uniform template to streamline the compliance process for GPs while giving LPs the level of information necessary to make investment decisions.
ACG, too, has taken steps to increase transparency between GPs and their LP investors. The ACG Private Equity Regulatory Task Force—a group of chief compliance officers, chief financial officers and in-house counsel to middle-market private equity firms—has formed a subgroup to focus on the issue of fees and expenses. The group is working to develop best practices to improve transparency and disclosure of manager compensation, shared services and portfolio company expenses.
To learn more about PERT or ACG’s other public policy initiatives, contact ACG Global Vice President of Public Policy Amber Landis at alandis@acg.org or 312-957-4272.
