Heather Heys
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With more investors looking to private capital, asset managers are under increasing pressure to streamline their reporting and disclosure processes.
In Preqin First Close in early February, we asked why private equity transparency and reporting have become vital in the fast-changing economic, political, and business landscape, and we also featured important new guidance by the Institutional Limited Partners Association (ILPA).
In January, ILPA issued new guidelines to standardize financial reporting by GPs. The Washington DC-based organization is globally influential, representing 600 members and more than $3tn private equity AUM. ‘There continues to be a gap between how LPs and GPs come together to set the foundation for the partnership,’ Jennifer Choi, ILPA’s CEO, told Preqin First Close in December.
The 2025 ILPA Reporting Template supplements quarterly reporting by managers as mandated by limited partnership agreements (LPAs), other governing documents, and jurisdictional requirements.
Enhancements and additions in the new template include:
presentation of partnership expenses, management-fee offset, and carry, with clearer definitions for the various reporting fields;
GP chargebacks and offsets specifically designed to separate out internal versus external charges to a fund; and
cash and non-cash flow sections, such as details of offering/syndication costs, placement fees, and partner transfers.
The refreshed reporting template replaces the 2016 version on a go-forward basis for funds still in their investment period in Q1 2026, and for funds commencing operations on or after January 1, 2026.
The private capital industry’s need to revisit transparency around expenses data was highlighted last year by the US Fifth Circuit Court of Appeals’ strike down of the SEC’s Private Fund Advisers Rule. It included specific quarterly statement publication and disclosure requirements. ILPA was keen to enhance regular reporting available to investors via its Quarterly Reporting Standards Initiative (QRSI).
Dominic Critchley, Co-Head of Fund Accounting, and Richard Stratford, Head of Strategy and Business Initiatives at Colmore (a Preqin company), participated in ILPA’s Reporting Working Group that produced the enhanced reporting template as part of QRSI.
As well as encouraging increased transparency and standardized reporting, the new template provides alignment between LPs and GPs, particularly for partnership expenses and offsets at the downstream reporting level. We might begin to see the same level of transparency flowing upstream into LPAs.
We also hope to see ‘blanket-term’ drafting within partnership expense sections of LPAs fall away. Travel, entertainment, and legal expenses, for example, could respectively be replaced with the clear definitions that are now so evident in the 2025 ILPA Reporting Template. (See our blog: Legal and travel expense drafting in LPAs - Colmore).
ILPA’s not the only professional body to be pushing hard on this subject. In December, the British Private Equity & Venture Capital Association (BVCA) and the UK’s Private Equity Reporting Group updated the Walker Guidelines. These encourage disclosure and transparency by fund managers who belong to the BVCA to publish additional information about the 90 largest UK private equity-backed companies.
It's worth keeping in mind that the guidelines were first developed in 2007, when private equity firms in the UK and worldwide faced growing public, political, and media criticism about their activities. Likewise, Drew Maloney, President and CEO of the American Investment Council, told Preqin last fall that ‘our industry must do a better job of engaging with policymakers and communicating our value’.
With unconventional forms of finance such as cryptocurrency on the rise, it’s also more important than ever for private capital to explain itself as clearly as possible and differentiate itself from financial speculation.
Heather Heys leads Preqin’s Legal Insights team and Shaun Beaney is Editor of Preqin First Close.
Read the original stories on transparency in private equity and the new ILPA guidelines in Preqin First Close, your essential newsletter for the global alternatives industry.
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The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.