The effect of the ILPA template

Bespoke fees and expenses reporting remains common practice.

Just over a quarter of managers are either exclusively using the Institutional Limited Partners Association fees and expenses reporting template or a modified version, the latest Private Funds CFO Fees & Expenses Survey shows. Meanwhile, 28 percent provide the information in the form for each LP, and 36 percent rely on audited financial statements.

“A lot of LPs are invested in multiple funds and they need to make sure they can pull all this information together so that they can produce reports,” says Withum practice leader Tom Angell. “They want to compare apples with apples. So, it is the GPs that end up putting this information into multiple different formats.”

PEF Services CEO Anne Anquillare agrees it is the LP community driving bespoke reporting. “A lot of that has to do with investors having different systems on their side,” she says. “What we are seeing though, is that the universe of data points that needs to be collected has stabilized. That means bespoke reporting doesn’t have to be too arduous. You are just presenting the same data in a different format.”

Smaller firms with more limited resources, tend to find it too costly to put together bespoke reports and so “let the audit speak for itself,” says Angell.

Neal Prunier, director of standards and best practices at ILPA, however, views the dilemma from the opposite perspective. “If you are invested across 20 different managers you are going to be getting documents in 20 different formats. It can be difficult to get to the bottom of your various fees and expenses when you have to master each GP’s way of doing things.”

This was, after all, why ILPA designed the template back in 2016 – to provide greater standardization. But Prunier admits it is not a one-way street, as LPs themselves have a variety of approaches to data. Private equity CFOs themselves will, of course, use the system that best meets their needs.

For Joshua Cherry-Seto, CFO and CCO at Wolf Capital Partners, that means including the data elements of the ILPA capital notice templates, but not the templates themselves. “We do not produce the fee and expense template either,” he says. “It is generally a lot of work to produce something that LPs are not specifically looking for, so instead we work with LPs on their actual needs.”

Blinn Cirella, CFO at Saw Mill Capital, meanwhile, relies on a detailed income statement: “We also have an annual fee and expense report that we provide at the fund level. I think if your financial statements are detailed and you have additional information in your footnotes, then that should be enough.”