Getting a GIPS (Global Investment Performance Standards) certifi-cation is a lot easier the second time around. Just ask AXA Private Equity, the French private investment company that last month announced its second annual GIPS certification.
For the uninitiated, GIPS is a standardized set of principals for calculating and reporting investment results put forth by the CFA Institute. Proponents of GIPS hope to see them voluntarily adopted as institutional investors begin to require that marketing materials presented by GPs and other asset managers conform to these standards. The CFA Institute put into effect GIPS this past January, although the standards were created in 1999, and a private equity standard was added in 2003.
Last year, AXA Private Equity became one of the few private equity programs to become GIPS-certified, and the first French firm to receive this seal of approval.
As with any organizational shift, most of the work in joining the GIPS club is done up front. In an interview last year with Private Equity Manager, AXA Private Equity head of administration and finance Marie-Lys Halloppe said her team had to revisit performance figures as far back as 1997. Considering the breadth of AXA Private Equity's offerings, the work was considerable. The firm manages three middle-market buyout funds, a venture capital fund, three secondary funds of funds, two ?early secondary? funds of funds, and two mezzanine funds.
?Now that the past performance has been reviewed for the GIPS standards, it will be easy to keep on adhering to them in the future. On a day to day basis, it should not create more paperwork, and we will not need additional administrative support,? Halloppe told PEM.
This year, again with the help of PricewaterhouseCoopers, AXA has had its certification renewed, but only for what the accounting firm deemed ?relevant? funds.
The private equity industry is not famous for its enthusiasm for standards. Many experienced LPs have grown wary of the variegated approaches GPs have used to present historic track record. In some cases the ?aggressive? version of a fund's performance is presented at the annual LP meeting, while the ?conservative? version is put in the PPM. This increasingly won't pass muster as the asset class grows, and AXA Private Equity, for one, doesn't want to leave any room for investor skepticism about its record.