Compiling quarterly reports and communiqués on fund level activity can be a time-consuming business for general partners. That being said, it is far less onerous than fundraising.
The kinds of quarterly reports some limited partners require, while difficult to put together, have tangible benefits when it comes to marketing a new fund, according to panelists at Private Equity International’s Investor Relations and Communications Forum on Wednesday.
Those reports and communications effectively serve as a form of due diligence for some existing LPs, said Kristin Custar of The Jordan Company. In providing those updates, firms create an easier path for themselves when it comes to raising a new fund, particularly as the fundraising environment becomes even more crowded.
“If you haven’t been out talking to these investors, and you’re hoping to go out and raise in 2013, you’ve already missed their allocations,” Custar said. “Part of our job is knowing our investor base well … knowing which investor needs more information and … knowing which investor doesn’t want you to call.”
Custar’s comments were echoed by David Lippin of Sun Capital Partners, who added that communications remind investors of fund strategy and message, and will keep firms “top-of-mind” as LPs consider new commitments.
In addition to the relationship between communication and fundraising, the panelists also covered the importance of face-to-face meetings with investors, and how staying abreast of the rest of an LP’s portfolio can help tailor messaging to specific investors.
“We were talking about staying in touch, in between [fundraisings]. There is something about the human touch, and having those meetings,” Lippin said. “If the deal team is out on a diligence trip in Kentucky, you stop in at the [investor's] office in Kentucky.”