For fund managers, keeping investors happy is a top priority. Some LP practices, however, just won’t fly. During the 2015 PEI CFOs and COOs Forum, some GPs (and LPs) aired their grievances on the most bothersome LP behaviors they have encountered.
Investors who ask for valuations indications before a fund manager has finished calculating them was a common gripe at the conference. “LPs are asking us for year-end estimates in December before the audit is completed. Knowing the information in advance is no help at all if the information is not definitely correct,” said one CFO at the conference. Some GP panelists indicated that they would swiftly deny such a request.
A similar issue arises when LPs put in requests for “capital call distributions over the next six months.” While one GP said he understood that investors might want the information for their own spending schedule, he joked he would have to respond with a blank piece of paper to such a request.
A final grievance came from an LP at the event. He noted that, although the LP advisory committee (LPAC) can be a very useful tool for LPs and GPs alike, members who “don’t know what they’re doing” can be more of hurt than a help to any fund.
The comments presented an interesting contrast to a recent pfm report in which LPs told the other side of the story and described some of the biggest mistakes that GPs are making. Among the top problems on the list were using the buzzword “robust,” leaving the limo or jet waiting out front, misrepresenting returns and making “lightly veiled job offers” when visiting public pension employees.