Two New ILPA Templates Available For Public Comment

Updated on: August 7, 2024

The Institutional Limited Partner Association (ILPA) has released for public comment the following two draft templates (Draft Post-PFA Templates) resulting from its Quarterly Reporting Standards Initiative (QRSI):

1. Draft ILPA Reporting Template (Post-PFA Version)
2. Draft ILPA Performance Template (Post-PFA Version)

The QRSI project was originally undertaken to enhance quarterly reporting to limited partners whilst simultaneously facilitating compliance with the Quarterly Statement Rule within the within the SEC’s now vacated Private Fund Advisers (PFA) Rule.

No longer constrained by mandatory reporting requirements imposed by the PFA Rule, ILPA re-evaluated the disclosure requirements, scope and commencement period in conjunction with the QRSI working groups, in which Gen II was an active participant.  The Draft Post-PFA Templates are the result of this collaborative approach.

We anticipate significant investor interest in the QRSI given their general support for the SEC’s desire to increase transparency, improve governance and address conflicts of interest, and the significant publicity accorded to the PFA Rule.

1. General Guidelines for the Draft Post-PFA Templates

The Draft Post-PFA Templates should be:

• Supplemental to the private fund’s standard reporting
• Prepared on a consistent basis with the fund’s GAAP reporting guidelines with respect to reporting entity and accounting policies, including consolidation
• Made available within existing reporting timeframes established between the general partner and limited partners
• Implemented for the Q1 2026 reporting cycle
• Adopted by active funds still in their investment period, as well as any future funds.

2. Summary of the Draft ILPA Reporting Template (Post-PFA Version)

1. A revision of the current Quarterly Reporting Template. Key differences to the existing template (version 1.1) include:
   1. Additional capital items including offering / syndication costs, placement fees and partner transfers
   2. Additional expense types paid or allocated to external parties
   3. Breakout of expense types paid or allocated to the investment adviser or related persons
   4. Additional management fee offset categories and gross-net management fee reconciliation
   5. Additional accrued incentive allocation roll-forward categories (e.g. realized, unrealized and paid)
   6. Additional fees, allocations and reimbursement categories paid or allocated to the investment adviser or related persons by portfolio companies.

3. Summary of the Draft ILPA Performance Template (Post-PFA Version)

1. A completely new template for illiquid funds, incorporating:
   1. A statement of contributions, distributions and ending NAV for all fee-paying limited partners in aggregate, classified following standard transaction types
   2. Fund performance table – calculations between the fund and all fee-paying limited partners in aggregate (based upon the above statement of contributions, distributions and ending NAV):
      • Gross levered investor IRR (recommended)
      • Gross unlevered investor IRR (recommended)
      • Net levered investor IRR
      • Net unlevered investor IRR
      • Net TVPI (distributions to investors plus unrealized value of the illiquid fund divided by investor contributions for any purpose)
      • Gross MOIC (distributions to investors plus unrealized value of the illiquid fund divided by investor contributions for investments)
   3. Portfolio performance table - calculations between the fund and its portfolio investments classified by realized, unrealized and partially realized (performance results only, no investment cashflow presentation):
      • Gross investment IRR
      • Gross MOIC (distributions from investments plus unrealized portfolio investment value divided by capital invested by the fund).

4. Key Differences between the Draft Post-PFA Templates and the (Vacated) Quarterly Statement Rule

1. ILPA reporting is not mandatory
2. Prescribed format and specific guidance
3. Leverage existing decisions re. reporting entity and GAAP policies (e.g. consolidation)
4. Implementation date deferred to Q1 2026
5. Reporting deadlines to be consistent with existing fund governing documents
6. New reporting requirements limited to funds still within their investment period, and for future funds, therefore limited backfill of data required
7. Reduced number of expense categories and use of “other” expense categories
8. No cross-referencing to governing document provisions required
9. No portfolio company by portfolio company breakdown of fees and compensation paid or allocated to the adviser and its related persons
10. Reduced number of required performance calculations and clarification of investor vs investment cashflows for realized and unrealized portfolio performance, and introduction of a partially realized category.

5. Next Steps

The industry has through October 11, 2024, to provide comment on these templates.  Gen II will be working with our clients to determine in-scope funds, and stress-test the reporting requirements to assist in the provision of feedback prior to template finalization by ILPA in late 2024.

If you have any questions, please reach out to your Gen II representative or e-mail Gen2QRSI@gen2fund.com.

6. Link to ILPA Website

The Draft Post-PFA Templates and the comment period surveys are available on the QRSI landing page.

Published on: August 7, 2024