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Private Equity Principles Version 1.0
ILPA Marks One‐Year Anniversary of Private Equity Principles
More than 140 respected institutional investors have lent their names to the Institutional Limited Partners Association’s Private Equity Principles, a best practice document that will help guide future investments in private equity and move the industry a step closer to establishing a set of guidelines that could strengthen the long-term viability of private equity as an asset class.
The ILPA marked the one‐year anniversary of the ILPA Private Equity Principles by announcing the Principles have received formal endorsement by 135 organizations globally. Click here to read the press release
To read the ILPA Private Equity Principles version 1.0, click here
ILPA Private Equity Principles History
March 2009: Members meet for a series of round tables regarding the state of the industry and governance.
March 2009: The ILPA Principles Committee is formed as a working committee to help craft the Principles document
May 2009: The ILPA releases a survey to its members to find out the opinion regarding partnership governance, alignment of interest between GPs and LPs and reporting & transparency.
Summer 2009: An expanded Principles Committee is structured to gather feedback from the GP community and other industry thought-leaders with the mandate to evolve the Principles as deemed appropriate
September 8, 2009: The ILPA Private Equity Principles are published
Now: With over 140 endorsing organizations, the ILPA is looking for your feedback and endorsements.
ILPA Private Equity Principles Endorsements
Historically, the private equity partnership structure has been effective in aligning the interests of investors (the “limited partners”) with those individuals managing the money (the “general partner”). By sharing a substantial portion of profits with the general partner and requiring the general partner to have a meaningful equity interest in their own funds, a business culture was created where most private equity firms were able to maintain a singleminded determination to maximize returns on the underlying investments. The principles contained herein are a means to restore and strengthen the basic “alignment of interests” value proposition in private equity.
Certain terms and conditions that have gradually evolved should receive renewed attention in private equity
partnership agreements entered into prospectively in order to (i) correctly align interests between general partners and limited partners, (ii) enhance fund governance and (iii) provide greater transparency to investors.
The concepts contained in these documents reflect suggested best practices and are intended to serve as a basis for continued discussion among and between the general partner and limited partner communities with the goal of improving the private equity industry for the long-term benefit of all its participants. These documents were developed through the efforts, contributions and collaboration of many institutional private equity investors and their senior investment officers, the Institutional Limited Partners Association (“ILPA”) and the Private Equity Principles and Best Practices Committee of the ILPA Board of Directors. They reflect the input and feedback from these market leaders and from discussion amongst limited partners at ILPA roundtable events and from a comprehensive survey/questionnaire of the ILPA membership.
Endorsement of the ILPA Private Equity Principles
The ILPA has authored the ILPA Private Equity Principles, a document that contains best practice concepts and that speaks to issues relating to the alignment of interest between general partners and limited partners, fund governance and transparency and reporting. It is intended to serve as a common framework for continued discussion among and between the general partner and limited partner communities with the goal of improving the private equity industry for the long-term benefit of all its participants. Endorsement of these Principles is an indication of general support for the efforts of the ILPA and industry supporters to contribute to an effort to strengthen the basic “alignment of interests” value proposition in private equity. The authors, sponsors and the groups below that have provided an endorsement of these Principles are not specifically committing to (nor seeking the commitment) of any private equity investor to each and every outlined term.
To view the principles, click here
To view the press release, click here
To view related press, click here
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