ILPA Private Equity Principles & Best Practices
Fostering the proper alignment of interests between Limited Partners (LPs) and General Partners (GPs) is a top priority for ILPA. Developed through collaboration with LPs, GPs and industry experts, the ILPA Private Equity Principles and series of Best Practice Guidance, promote such alignment with an emphasis on transparency and governance. As issues emerge within the private equity industry, ILPA is committed to responding to requests for guidance to ensure that best practices are encouraged, adopted, and evolve in line with the best interests of all industry participants and their beneficiaries.
Best Practices for the Private Equity Industry
In support of empowering LPs and the broader Private Equity industry to adopt effective best practices, ILPA’s suite of guidance includes the ILPA Private Equity Principles, NAV-Based Facilities, Subscription Lines of Credit, Continuation Funds, GP-Led Secondaries, Industry Code of Conduct Guidelines, and Best Practices for Relationships with Insurance Company Limited Partners.
NAV-Based Facilities
ILPA’s newly released guidance on NAV-Based Facilities were developed to provide general parameters for improving transparency and encouraging a more productive dialogue between LPs and GPs. With the increasing utilization of NAV facilities by GPs, limited transparency around their use inhibits LPs’ understanding of the impacts of these facilities (including costs and any risks) and Limited Partnership Agreements (LPAs) often do not explicitly address NAV facilities, leading to differing approaches among GPs in engaging LPs around their use, as well as a spectrum of approaches to reporting.
ILPA Principles
Developed in partnership with LPs, GPs and industry experts, the ILPA Principles were developed to support greater alignment between LPs and GPs regarding fund partnerships in private equity. ILPA continues to assert that three guiding principles form the essence of an effective private equity partnership: alignment of interest, governance, and transparency covering key issues including GP and fund economics, fund terms and structure, key person considerations, fund governance, financial disclosures, notification and policy disclosures, and LP disclosures.
Subscription Lines of Credit
ILPA’s guidance on Subscription Lines of Credit were developed to address how the utilization of credit impacts limited partners and includes recommendations for gaining clarity in partnership agreements, specific quarterly and annual disclosures that will provide LPs the visibility they need to better monitor the impact of subscription lines on both exposure and performance, and the key terms and costs associated with subscription lines in use.
Continuation Funds
ILPA’s guidance on Continuation Funds were developed in response to the increased utilization by GPs and LPs alike seeking to maximize returns, the lack of industry consensus regarding what constitutes a well-run continuation funds process, and the need for greater transparency. Our guidance calls for GPs to pursue processes and deal structures that maximize alignment and encourage productive dialogue to foster more informed decision-making and engagement by LPs.
GP-Led Secondary Fund Restructurings
ILPA’s guidance on GP-Led Secondary Fund Restructurings were developed to address the increased prevalence of such transactions and is intended to provide general parameters for well-run GP-led processes that will encourage productive dialogue and foster greater alignment and engagement by LPs.
Industry Code Of Conduct Guidelines
ILPA’s guidance on Industry Code of Conduct Guidelines were developed to promote the consideration and adoption of an appropriate Code of Conduct (“Code”) at all stakeholder organizations within the private equity ecosystem with specific focus on harassment, discrimination, and workplace violence.
Relationships With Insurance Company LPs
ILPA’s guidance on Best Practices for Relationships with Insurance Company Limited Partners were developed to outline considerations for GPs who wish to improve their engagement with US-based Insurance LPs and includes specific focus on disclosures and reporting requirements, ownership and control provisions, partnership structures and tax issues.
There’s never been a more exciting time to become an ILPA member
Join ILPA now to connect with a global network of LPs, maximize your performance, and advance your interests through best-in-class education, research, advocacy, and networking.
