AltExchange digitises ILPA fee reporting template – exclusive

The AltExchange Alliance – a non-profit consortium of LPs, GPs and service providers pushing for a common standard to share data – has released a new digital format for reporting private equity fees and expenses. The new format reflects the information captured by the Institutional Limited Partners Association’s (ILPA) recently-released fee reporting template, pfm has learned.

AltExchange first issued its Group One Standard in 2013 as the industry’s first detailed template for the exchange of data related to capital accounts, schedules of investments and cash flow activity.

The AltExchange Standard requires for the information to be run through the AltExchange Validation Platform to check that it is complete and filled out in the correct numeric formats and validates it as ready for transmission, with the aim of making the party-to-party transfer of the digital data more consistent, simple and uniform.

The updated version incorporates the information included in the ILPA Reporting Template. The LP trade body published the final version of its fee reporting template, which provides a standardized way for GPs to share fee information with investors, in January of this year. 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.

The add-on will allow GPs and LPs to exchange information on fees, expenses and carried interest in an XML format which can be incorporated into whichever software platform each party uses to collate, send and receive information, such as eFront or SunGard.

“The idea is you can import the AltExchange standard into your system, it’s XML so it can go into any system that you use, you can fill it out, it can generate a message that goes through the validation platform, spits back out a message that says ‘this is fully complete and ready to send on’ […] and then it goes to the LP in whatever format the LP is able to capture it,” said Jennifer Choi, ILPA’s Managing Director of Industry Affairs.

“The goal here is that there are efficiencies and economies of scale on both sides.”

Following the unveiling of the fee-reporting template in January, ILPA chief executive Peter Freire and Choi have been spreading the word across a number of industry events, including PEI’s CCFOs and COOs Forum in New York, the International Private Equity Market conference in Cannes, and at SuperReturn International, as reported by pfm.

So far, 43 LP organizations and three GPs – TPG, The Carlyle Group and Silver Lake – have endorsed the ILPA fee reporting template, with more expected to follow.

Many LPs are beginning to introduce the template to GPs via side letters for new funds, Choi told pfm.

“It’s a lot more tenable to figure out how to calibrate your systems in future to produce this than to try and unwind the way things were done historically where you may not have captured expenses according to the categories laid out in the template,” Choi said.

“Certainly for new funds, where you’re still a year or two away from beginning to draw capital and incur real expenses, you can be thinking now about ‘how would we change our accounting systems? How would we change the way we run cash in the management company?’ There are operational considerations that are easier to figure out when you’re looking ahead versus looking back.”