Calpers Backs Principles To Improve Private-Equity Industry
The California Public Employees’ Retirement System has endorsed principles aimed at improving fairness and transparency in the private-equity industry.
The principles, proposed by the Institutional Limited Partners Association, call for a closer alignment of interests between limited and general partners in private-equity deals, improved investment reporting and transparency, and better partnership governance.
Joseph Dear, chief investment officer of CalPERS, said private-equity partnerships need to include “improved governance rights consistent with the maturing of the asset class.
Amid the global financial crisis, private-equity firms have been adjusting the way they craft deals in response to the demands of limited partner investors. Not too long ago, over-subscribed private-equity firms called the shots. Now the balance of power is shifting, with limited partners both selling and negotiating their commitments downward.
The ILPA, a trade association for limited partners such as pension plans, foundations and other institutional investors, developed the principles after months of working with institutional investors.
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