The Institutional Limited Partner Association (ILPA) today released “a set of best practices to address important issues relating to the alignment of interest between general partners and limited partners, fund governance and providing greater transparency to investors.”
I’m still working through it, but have posted it below so that you can read along. You also can download them here.
Update: My gut take is twofold:
(a) I concur with a majority of what ILPA has proposed. Probably not surprising, since my demonstrated bias is typically toward LPs. For example, ILPA believes that 100% of fees (monitoring, exit, transaction, advisory) should accrue to the fund, rather than be split with the GP. I do have some quibbles – don’t believe supermajority of LPs should be able to terminate investment period without cause – but far more agreement than disagreement.
(b) I am severely skeptical that any of it will matter. It’s nice to get some best practices down on paper, but there is little reason for GPs to pay much attention. Sure ILPA has a large membership (despite its exclusion of funds-of-funds), but the members are not pledging to reject GPs who don’t follow the guidelines. Reminds me of the PEIGG valuation guidelines proposed years ago, when the LP co-authors admitted that they’d invest in a “hot” fund that didn’t comply. Same thing will go here. Just look at what happened yesterday with KPS Capital Partners, which has a 50/50 fee split…