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Private Equity Firms Adopt Fee-Reporting Template as Investors Demand Transparency

Ares Management, Bridgepoint and Oaktree are among the lastest backers of the Institutional Limited Partners Association’s fee transparency initiative.

  • Staff

Investors are gaining ground in the fight for transparency in private equity.

The Institutional Limited Partners Association announced Thursday that its fee reporting template – an attempt at boosting transparency by standardizing how private equity costs are recorded – has been widely taken up by the industry during its fifteen months of existence. More than 160 fund managers have submitted fee information using the template, with new endorsements from Ares Management, Bridgepoint and Oaktree Capital Management.

Apollo Global Management, KKR & Co. and Carlyle Group are among the private equity firms that have earlier endorsed the standardized format benefiting their limited partners, according to ILPA’s website. Pension plans, and other institutional investors with billions of dollars tied up in buyout funds, are demanding more fee transparency to help assess the cost of their private equity relationships.

“We view the ILPA reporting template as the best standard for collecting fee and expense data for private market funds and a crucial step towards automation in the industry,” said Scott Evans, chief investment officer for the New York City Retirement System. He said the higher level of transparency has “saved considerable time and effort.”

ILPA said it will focus this year on identifying best practices for using the template. The group plans to provide new guidance for maintaining oversight of the data, including recommendations to ensure compliance with the agreements struck between investors and private equity firms.

“Following a successful year of template adoption by the global private equity community, the time is right to” support those limited partners who want more transparency but have yet to use the template, said Peter Freire, CEO of the ILPA.

More than 60 limited partners, including the California Public Employees’ Retirement System, the Canada Pension Plan Investment Board, the Florida State Board of Administration and the Employees Retirement System of Texas have endorsed ILPA’s format for reporting fees.