ILPA launches quarterly reporting template project

Whatever happens to the SEC rules, the trade group hopes the industry can unite to raise the floor on transparency.

The Institutional Limited Partners Association is launching a project that backers hope will create voluntary industry standards for quarterly private fund reporting.

ILPA says it wants to hear from GPs, LPs, fund administrators, vendors, law firms and other industry groups about how the industry can develop a new template for private funds’ quarterly fee and expense reports.

The US Securities and Exchange Commission’s embattled new private funds rules lends some urgency to the group’s cause. Regardless of what federal courts decide, the organisation sees an opportunity to bring clarity to the private funds’ market.

“We want to come up with a standardised list of fees and expenses that should be included in an updated, quarterly reporting template,” ILPA senior director Neal Prunier told affiliate title Private Funds CFO in an interview Tuesday, just after the group disclosed the project. “ILPA’s current template has nine categories for partnership expenses, but one is ‘other’. Under the SEC rules, ‘other’ doesn’t provide sufficient transparency. We want the list to be exhaustive, without being overwhelming, while providing LPs with greater consistency in disclosure from GP to GP.”

Private funds advocates have sued to vacate the SEC’s private fund rules. ILPA and some of its members have weighed in on that litigation, saying that while they’re not thrilled with everything in the rules package, they want the courts to preserve the commission’s right to regulate private markets. ILPA’s new efforts to come up with a fee and expense template are at once a salve – offering GPs a more-or-less ready-to-pour answer that will help them comply with the regulations if they’re allowed to stand – but also an olive branch that may help ease the tensions between GPs and LPs over the new private funds rules, or (depending on how the courts rule) the next round of private fund rules.

“We want this to be an industry-led effort,” Prunier said. “We want this to be something where the industry can converge and come up with solutions to show that we can create the alignment necessary for a fully functional private fund industry.”

As it relates to secondaries transactions, the private fund advisers rules voted through last year mean GPs either based in the US or with US investors must obtain a fairness opinion or a valuation opinion from a third party in continuation fund transactions.

Registered private equity fund sponsors will also have 60 days from the end of each quarter to report GP-led secondaries deals, the removal of a general partner, investor-led liquidations or other “termination events” under the regulator’s Form PF rules.

‘We want to push this forward’

The initiative already has at least six GPs behind it, Prunier said. In the hours after ILPA announced the project, at least 40 other firms or organisations responded to ask about getting involved, he said.

Under the SEC’s sweeping private funds rules, adopted by a divided commission late last summer, registered private equity managers are required to distribute quarterly reports on their fees and expenses across 16 different categories.

ILPA has pushed for standardised fee and expense accounting since at least 2016, when it launched its initial fee and expense reporting template. Regardless of what happens to the SEC’s rules, LPs’ demands for consistency, clarity and openness are not likely to go away, Prunier said.

“These are the next, natural evolutions of ILPA standards and templates,” Prunier said of the new project. “We want to push this forward even if the rules are vacated.”

If allowed to stand, the SEC’s quarterly reporting requirements take effect in March 2025. ILPA says it wants to open a public comment period on its new template by May, with the final version published in June or July.

“If ILPA wasn’t doing this, every GP would need to be doing this kind of thing independently,” Prunier said. “And they already are, in many respects. We want to work with those groups so that what they put out there can be as standardised as possible across the industry.”