In an open letter in response to the Institutional Limited Partners Association (ILPA) consultation on its reporting and performance templates, the EDHEC Infra & Private Assets Research Institute (EIPA) has expressed strong support for the ILPA’s initiative to enhance transparency by improving performance and reporting disclosures in private markets.
EIPA also commented that a standardised valuation approach that brings the focus back to asset-level information could provide strong foundations to improve benchmarking practices. Transparent and objective factor-model-based valuations can reduce gaming of the valuation and also provide private-market-specific return proxies. A first step in this direction could be for ILPA to recommend benchmarking guidelines that restrict the degrees of freedom in comparing performance, such as proposing standardised definitions of metrics, objective identification of peer groups, and increased information about comparisons. Moreover, ILPA could insist on using private market-specific indices as a reference for comparison.
Commenting on the open letter, Frederic Blanc-Brude, Director of EIPA, said, “The introduction of disclosures about subscription lines in the performance template and the increased detail on fees in the reporting template, as part of the proposed Quarterly Reporting Standards Initiative, are commendable. We believe these changes will enable LPs to make more informed decisions in private markets. Furthermore, these templates set a high standard, and their adoption by GPs can substantially improve private market investing.”
