The ILPA publishes research reports on issues important to our members and global private equity industry professionals. ILPA research is used as industry reference data and distributed to the market via press articles, conferences or member-only workshops.
Members’ Edge is an online database available exclusively to the over 2,000 investment professionals, who represent the 295+ ILPA member organizations and who manage over $1 trillion of alternative assets. The tool has been expanded to provide members with access to real-time industry data on GPs and their funds. Members’ Edge is a valuable service that benefits both GPs and ILPA members, as it provides a platform for limited partners to efficiently research the private equity universe with enhanced accuracy.
Members’ Edge has two components:
Profile – An online profile for each GP and fund, detailing the data (e.g. primary investment criteria, contact info. and fund size) contained in the Members’ Edge database.
Search – Search functionality that allows members to generate customized results that fit over 50 parameters related to GPs and funds.
To ensure that accurate, detailed information is being reported, GPs can elect to update their own profiles. Using the ILPA’s subscription service, GP Subscribers can control the content of their profile in real-time via their password-protected web-ID. A subscription gives GPs the ability to create and control an enhanced profile with twice as many searchable fields as the basic profile. The enhanced profile includes the GP’s fundraising information, detailed investment criteria and value creation proposition. The extensive number of editable and searchable fields allows GPs to customize their profile to better match LP search criteria for fund research.
GP Subscribers that contribute their performance data to Cambridge Associates will also receive the quarterly ILPA Private Markets Benchmark reports.*
How do Members Benefit from Members’ Edge?
How do GPs Benefit from a Subscription?
Included in annual membership fee
Access to online profiles for over 2,100 GPs and 5,900 funds (and growing)
Data includes investment criteria, fundraising information, GP contact information and key fund metrics
User-friendly search functionality allows members to generate customized GP and fund results
Customized search results and online profiles can be used for research, screening, networking and onsite-planning purposes
Search results can be downloaded and are sortable
Online profiles are printable
Cost effective service that allows GPs to control their message to 295+ institutional investors and their 2,000 employees
Access to editable profiles on ilpa.org
Accuracy and content of profiles are controlled by the GP and changes are made in real-time
Michael Elio, Managing Director of the ILPA, participates in a discussion (courtesy of Privcap) about the ILPA Private Markets Benchmark. The panel covers the methodology, composition and relevance of the ILPA benchmark, and its unique role in the market.
About the ILPA Private Markets Benchmark Initiative
A top priority of the ILPA has been to develop a private equity benchmark that accurately and consistently represents the global investible universe and asset class performance for institutional investors. In 2012, the ILPA entered into a five-year agreement with Cambridge Associates, a leading institutional advisor and private investments benchmark provider, to jointly construct the ILPA Private Markets Benchmark. The combination of Cambridge Associates’ extensive database of performance information and the high rate of ILPA member participation has resulted in a robust benchmark.
During the initial development of the benchmark, the ILPA gathered a preliminary list of fund holdings from over 100 members. This preliminary list represented over 1,800 unique funds and provided the benchmark’s initial building blocks. Since then, the list of benchmark funds has increased to over 2,600, representing a significant cross-section of fund commitments made by institutional investors. The aggregate performance of these funds is reported in the form of composite reports, characterized by strategy, geography and vintage.
To further the development of the benchmark, the ILPA seeks to increase the number of member-contributors to the list of benchmark funds. This list includes the primary funds, co-investment funds, secondary funds/interests, separate account vehicles and fund-of-funds in members’ portfolios. Contributing members will remain anonymous and all information gathered through this effort will be confidential and aggregated on a non-identifiable basis. Subject to approval, contributing members will also receive access to the Cambridge Associates’ Benchmark Calculator program at a significantly reduced rate.
Please note, the ILPA Private Markets Benchmark is currently available to all members, as well as eligible General Partners through their Members’ Edge subscription.
The FAQ below covers many of the basic questions about this initiative. Member participation is paramount and the ILPA is ready to address all questions and concerns. Members should contact firstname.lastname@example.org, or the contacts below, to learn more about this initiative, or to become a benchmark contributor.
1. Why did the ILPA undertake the development of an industry benchmark and what is the goal of this initiative?
ILPA members have consistently rated the need to develop a benchmark that serves the needs of institutional investors of private equity as a top priority for the association. The effort to collaborate with industry specialists to develop the benchmark is consistent with the ILPA’s mission of advancing the interests of its members through research, education, best practices, networking and global collaboration. The goal of the ILPA Private Markets Benchmark is to create a world-class, industry-recognized private market benchmark that accurately and consistently represents the global investible universe and asset class performance for institutional investors.
2. What is the difference between the ILPA Private Markets Benchmark and Cambridge Associates’ published benchmarks?
The ILPA Private Markets Benchmark will focus solely on the universe of funds in which ILPA members have invested. Cambridge Associates’ various benchmarks may include private markets performance data for limited partners that are neither ILPA members nor institutional investors.
3. What is the nature of the relationship between Cambridge Associates and the ILPA, as it relates to the ILPA Private Markets Benchmark?
Cambridge Associates has an established methodology for processing General Partner data to create benchmarks. The ILPA and Cambridge Associates have entered into a five-year, collaboration agreement to construct and deliver a benchmark for institutional investors.
4. How often will the ILPA Private Markets Benchmark be issued?
The benchmark will be issued on a quarterly basis, approximately 140 calendar days after quarter end.
5. How can ILPA members access the benchmark?
Members can access the benchmark by logging in here.
6. How will ILPA members be notified that the newest benchmark reports have been released?
Members’ will be notified via the ILPA’s weekly email update, as well as the ILPA LinkedIn page.
7. How much do ILPA members pay for the benchmark?
The benchmark is included in the annual ILPA membership fee.
8. How can non-ILPA members access the benchmark?
Currently, GPs that subscribe to the ILPA’s Members’ Edge database are the only non-members that are authorized to access the benchmark. GPs can click here for more information about subscribing to Members’ Edge. GPs can click here to begin the subscription process.
9. What kind of information do ILPA members need to provide to contribute to this initiative? How often will this data need to be updated?
The ILPA is requesting its members to provide a list of partnership names for all current and historical fund investments (including primary funds, co-investment funds, secondary funds/interests, separate account vehicles and fund-of-funds). Updates to existing partnership lists will be requested on a semi-annual basis. However, fund names from new contributors will be added to the lists on an as-provided basis.
10. How will the ILPA treat the information that a member provides with respect to security and confidentiality?
The ILPA has signed and executed non-disclosure agreements with every employee, consultant, advisor and strategic partner, including Cambridge Associates. All member information will be stored exclusively on the ILPA’s internal platform. The ILPA will not release any member information to any party.
11. What do ILPA members need to do to participate in this benchmarking effort?
Members should send an expression of interest, including their organization name and contact information, to email@example.com. The ILPA will follow-up to obtain a list of partnership names for all current and historical fund investments. Requests for an updated list of fund names will be made on a semi-annual basis.
12. What benefits do ILPA members receive if they provide the requested information to the benchmark initiative?
Subject to approval, members that contribute their fund lists to the benchmark initiative are eligible to access Cambridge Associates’ Benchmark Calculator at a significantly reduced rate (80% discount to the standard rate).
13. What are the benefits of the Cambridge Associates’ Benchmark Calculator?
The Cambridge Calculator offers a variety of reports and filtering capabilities to calculate aggregate returns on both a fund and portfolio investment company level.
14. Once it has contributed its list of fund names to the benchmark initiative, how does an ILPA member request access to the Cambridge Associates’ Benchmark Calculator?
Members should send a request for access to firstname.lastname@example.org. Pending approval, they’ll receive a welcome package, which includes all licensing and invoicing details.
15. How does the ILPA and/or Cambridge Associates obtain the fund level information in the benchmark?
The ILPA and Cambridge Associates will obtain the information primarily from General Partners. In circumstances where fund level information cannot be obtained from General Partners, the ILPA and Cambridge Associates may seek to collect this fund information from Limited Partners.
16. What types of statistics and categories are used in the benchmark?
Performance statistics include rates of return (net IRR & public market equivalents) and investment multiples (DPI, RVPI & TVPI). These statistics will be expressed in terms of time period (since-inception, year-to-date, etc.), quartile ranking, vintage year, geography and strategy. As the benchmark sample size expands, the number of statistics, composites and types of analysis is expected to increase.
17. What are the components of the ILPA Private Markets Benchmark universe?
Currently, the investment universe is broken into nine components: 1) U.S.-Only Private Equity (buyout, growth and mezzanine), 2) U.S.-Only Venture, 3) Europe PE & VC, 4) Asia and ROW PE & VC, 5) Distressed, 6) Natural Resources, 7) Fund of Funds, 8 ) Secondary Funds and 9) All Funds (inclusive of the other 8 components).
18. Are there any expected changes to the format and structure of the ILPA Private Markets Benchmark?
The composites, statistics and formatting of the benchmark continue to evolve at the direction of member feedback. Suggestions to the format should be directed to email@example.com.
As institutional investors increase their focus on issues related to alignment of interest, governance and transparency with their private equity manager relationships, the level of detail required for their upfront fund diligence process has increased. This increase has resulted in the proliferation of lengthy, customized due diligence questionnaires (“DDQ”) by many Limited Partners, advisors and placement agents. These customized DDQs, which have varying content and length, have created an extraordinary administrative burden on all interested parties, including Limited Partners, General Partners and Placement Agents.
Additionally, to ensure they are cognizant of the industry’s best practices, LPs are attentive to the types of diligence questions their peers are asking. With few available forums dedicated to the sharing of diligence practices, some Limited Partners may not even be aware of the level of detail being provided to their peers regarding a prospective fund.
The search for a more efficient process, and a means of minimizing the administrative burden of fundraising on all parties, prompted the ILPA to reach out to General Partners, Limited Partners, Placement Agents and other interested parties to craft a DDQ tool that may offer those efficiencies. The resources used to create and process the customized, but often redundant, questions and responses could then be repurposed toward additional transparency, assessment and analysis of results.
The ILPA Due Diligence Questionnaire (“ILPA DDQ”) was compiled from over a dozen sample questionnaires provided by LPs, GPs and third parties. It has been reviewed by the members of the ILPA Research, Benchmarking & Standards Committee, as well as several industry leaders as part of a six-month, public comment period.
Please note that the ILPA DDQ is not intended to be a required document that all GPs must adopt. It is also not a panacea for all LPs’ diligence needs. We acknowledge that some variation may still be employed in the industry. The goal of the DDQ Tool is to limit those variations to the few additional questions specific to that LP or GP.
The ILPA DDQ covers many topics related to fund diligence, including:
General Firm Information
General Fund Information
Alignment of Interest
These topics are covered in a series of short form and long form questions that are designed to help shape the direction of an LP’s diligence process. The ILPA DDQ also provides a list of requested documents and data points that would ideally be provided in any GP’s diligence package.
Included in this package are many of the frequently asked questions received during the ILPA DDQ’s comment period. For further questions contact the ILPA directly at +1-617-716-6500 or firstname.lastname@example.org.
ILPA Due Diligence Tool Frequently Asked Questions (FAQs)
1. What is the purpose of this document?
The ILPA’s goal is to reduce the administrative burden of LPs, GPs, Placement Agents and other third parties by providing a best-in-class due diligence questionnaire. Adoption will make questionnaire stage more efficient by minimizing the number of customized DDQs from LPs and consultants.
2. Is the industry required to use this document?
No, the ILPA understands that this document may not necessarily be applicable for all funds, or provide efficiencies for all parties. However, GPs that receive multiple questionnaires, with redundant and differently-organized questions, should see efficiencies in the diligence process.
3. How should GPs with funds for different strategies/geographies/industries (e.g. separate venture and growth funds) answer questions about the firm, and its funds and teams that aren’t currently fund raising? What level of information is relevant to LPs if they are only conducting diligence on a specific type of fund offered by a GP?
In these situations, the GP does not necessarily need to provide detailed information about business units that are materially unrelated to the Fund. (A simple overview of these non-related business units should be made available, however.) Unless specifically noted, any reference to the “Firm” in the ILPA DDQ should be focused on business units materially related to the Fund. GP’s should clearly state the business units being included and be able to explain their rationale for excluding others.
4. Are GP’s expected to provide answers to any “sensitive” questions in this document?
GP’s are not required to divulge sensitive information, especially if it violates any non-disclosure agreements with other parties. It is also understood that GPs may need to use caution in providing information to organizations they feel are not genuinely interested in committing to their fund. However, as fiduciaries, Limited Partners should not feel restricted from asking sensitive questions. The GP’s right to guard confidential information is no greater than the LP’s right to inquire about information they feel is relevant to the transparency and alignment of their potential partnership. If GPs are more comfortable with providing certain answers in person, in a redacted format or at a later stage in the diligence process, they should feel encouraged to do so. However, they should also provide an explanation for their rationale, as well as any further direction for LPs, in this document.
5. Are GPs expected to answer questions that are not applicable to their specific fund?
The ILPA DDQ is an attempt at a comprehensive questionnaire that applies to the majority of private equity funds. LPs should understand that not all questions are applicable to all GPs/funds. GPs should use their best judgment to only answer questions that are relevant to their organization. For skipped questions in the Detailed Questions section, GPs should provide a brief, one sentence statement explaining their rationale for not answering. For the skipped questions in the Basic Questions section, “N/A” should be populated in the “Reference” field.
6. Should LPs use a GP’s answers in the Basic Questions section (yes/no questions) as the sole criteria for their ultimate investment decision?
No, the basic questions are intended to provide LPs with a top-level checklist, and a framework to highlight issues that need further clarity. There may be extenuating circumstances that explain a particular “negative” answer. GPs should use the “Reference” field in the Basic Questions section to direct LPs to more expanded answers to these questions. LPs should review the expanded answers in the Detailed Questions section, as well as their own follow-up questions, before making any investment decisions.
7. Should LPs only use this document? In what format should additional questions be sent to the GP?
One of the goals of this document is to minimize, not eliminate, the variations in LPs’ diligence processes. While the ILPA believes that this is a comprehensive document that covers all of the questions that institutional investors should ask GPs, it may be necessary to supplement this document with additional questions. Additional questions should not be added to this document. To avoid any confusion, these questions should be listed in a separate document.
8. In various questions related to the Firm’s staff, the form references both “Principals” and “Team Members.” What is the difference between the two? For the purposes of this document, what criteria should a GP use to define each?
As referenced in Appendix B, “Team Members” refers to all Firm-personnel, including investment professionals and senior non-investment professionals that left the Firm in the last ten years. “Principals” refers to the Firm’s management team and other core members that have a significant contribution to the Firm’s direction and investment performance. The “Principal” designation should be made at the GP’s discretion. However, GPs should be prepared to answer any questions about their decision rationale.
9. Can GPs cite responses in their PPMs in the ILPA DDQ?
It is recommended that all answers should be contained in the questionnaire. Any relevant answer in the PPM should be copied into the DDQ to preserve the DDQ as a stand-alone document.
The document library contains all of the ILPA’s research papers, projects, presentations and sundry reviews as submitted by members, staff and validated third parties. Search by keyword, title, author or event and on-line access is a click away.
As well as undertaking its own projects and member surveys, the ILPA explores collaborative projects with Industry specialists that will increase value to our members. If you are interested in partnering with the ILPA, please contact us.