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GPs feel the strain as LPs push for more transparency on portfolio performance and fee structures

6 July 2020

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  • COVID-19 spurs LPs demand for more detailed and frequent investor reporting
  • 70% of GPs think investor reporting has become one of the biggest CFO pain points
  • GPs turn to digital solutions and outsourcing to tackle reporting demands

Nearly four fifths (79%) of private equity fund managers expect investors to demand more transparency in reporting on portfolio company performance over the next 12 months, reflecting growing concerns over the impact of the COVID-19 pandemic.

Intertrust, a global leader in providing tech-enabled fund and corporate solutions, interviewed around 150 private equity fund managers across Europe, North America and Asia to identify the risks and opportunities facing the industry over the coming year.

As well as portfolio company performance, over half of GPs (59%) expect LPs to call for improved disclosure on fee structures and as well risk exposures (55%) and expense allocations (48%).

As GPs respond to ever rising demands for transparency among LPs, 70% of managers agreed that investor reporting has become one of the biggest pain points facing private equity CFOs and 61% expect to see a growing appetite for outsourcing fund administration over the coming year.

When asked to assess how private equity managers are prioritising investor reporting improvements, two thirds (66%) cited greater transparency in the level of information supplied such as the reporting templates issued by the Institutional Limited Partners Association (ILPA), designed to encourage uniformity in fees, expenses and carried interest disclosures.

Over half of respondents (56%) believe the answer to dealing with increased demands for investor reporting and transparency lies in adopting digital solutions, such as a digital portals offering anytime access to financial information.

Chitra Baskar, Global Head of Funds at Intertrust, said: “COVID-19 has exacerbated the growing trend among LPs for more granular data from their GP partners and it’s no surprise that portfolio company performance and fee structures are at the top of their lists.  Investor reporting us putting increasing pressure on GPs who are rightly looking to technology to provide solutions. We’re seeing growing interest from private equity managers in the type of tech-enabled support we can provide and expect this to continue rising in line with the push for greater transparency and operational efficiency.”

To download the full Global Private Equity Outlook 2020 report, please click here.

*Research was carried out in April 2020 where a total of 143 responses were gathered from private equity fund managers across Europe, North America and Asia.