The Institutional Limited Partners Association, a trade group for institutional investors who are limited partners in private investment funds, released on Tuesday an update to its reporting template, a framework for how private equity firms report fees and other expenses to their LPs. This is the first update to the template since 2016.
The ILPA also announced a new performance template, which seeks to standardize private equity firms’ return calculating methodologies. The association noted in a statement that the performance template is an industry first and that private equity firms should begin using both templates in the first quarter of 2026.
Changes in the updated reporting template include, according to the ILPA:
- Breaking out internal chargebacks to identify expenses allocated or paid to general partners or related persons;
- Adding more granular external partnership expenses better aligned to general ledgers; and
- Creating a single, uniform level of detail for all GPs to provide with the reporting framework identified in governing documents and accounting standards.
Some key features of the new performance template, which seeks standardization by creating a framework for capturing performance metrics and corresponding contributions and distributions, include:
- Tables to capture cash flows and fund- and portfolio-level transaction type mapping for transparency into the calculation methodology for performance metrics;
- Standardized reporting for performance metrics, including internal rates of return, total value paid in and multiple on investment capital, with designated breakouts for reporting the relevant gross and net figures with and without the impact of fund-level subscription facilities; and
- Two versions available to support GPs’ varying approaches to fund-level performance calculation methodology: one based on itemized cash flows and one based on grossed-up cash flows.
“The ILPA team is proud to have led this important effort to create the next evolution of ILPA reporting standards,” said ILPA CEO Jennifer Choi in a statement. “The industry input and engagement throughout this entire process has been incredible, and as a result, we’re confident that we’ve developed templates and guidance that will be widely adopted and usher in an era of even greater transparency, alignment and partnership.”
The ILPA’s Quarterly Reporting Standards Initiative’s steering committee, which assisted in developing the standards, included representatives of the California Public Employees’ Retirement System, Caisse de dépôt et placement du Québec, Pennsylvania’s Public School Employees’ Retirement System, the State of Wisconsin Investment Board and the Teachers’ Retirement System of Texas.
GPs represented on the steering committee included Cerberus Capital Management, Searchlight Capital Partners and Vista Equity Partners. Fund of funds firm Asia Alternatives was also represented on the steering committee, which also included fund administrators CSC and State Street.
As more and more pension funds and other institutional investors increase their allocations to private equity and other private-market assets, allocators are seeking increased transparency into the fees they pay their managers. In May 2024, dozens of asset allocators signed a letter calling for the hedge fund industry to implement cash hurdles before charging incentive fees.
“CalPERS is a leader in advancing disclosure-whether it is on fee structures, climate risks, or governance. We believe transparency is vital to ensure that investors are fulfilling their fiduciary duty on behalf of their members,” said a spokesperson for CalPERS, speaking on the importance of transparency.
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Tags: ILPA, Institutional Limited Partners Association, Private Equity