Most of you will probably be familiar with the Institutional Limited Partners Association - or more commonly referred to, ILPA, the global, non-profit, member-driven organization whose mission is to advance the interests of over 550 member institutional investors from more than 50 countries representing over 2 trillion dollars into Private Equity funds.
We talked to Jennifer Choi, Managing Director of Industry Affairs at ILPA. She discusses the characteristics of a Limited Partnership agreement, and its implications on LP/GP relationships, and how ILPA plays a role in enhancing these partnerships. We also speak specifically about ILPA and how it became the only organization created by LPs for LPs, and how it adapted to the changing needs of its members amid the crisis.
• 5 min. read •
About Limited Partners:
Jennifer Choi: "The maximum leverage that LPs really have is at the point of negotiating their entry into the fund. That's when they can really set the terms when they can push for certain things within the LP agreement, certain items within that signed letter agreement that they negotiate on the bilateral basis with the GP. That’s really the maximum opportunity LPs have to push for things like transparency in fees etc..."
JC: "If you are an investor as an LP in PE, this is the only place where you can go and be with your own kind and really benefit from programming, content, networking opportunities, education really tailored to your needs. We remain the only LP focused organization in our industry. We are global. Members from over 50 countries, including all types of institutions, programs, strategy mix, maturity.
(...) The starting point was education. We have built a world-class education platform. It is unique because it is “by LPs for LPs”. Built to suit all types of LPs, new players in the asset class and series that drill deeper for more experienced LPs."
About LP/GP Relationships:
JC: "You have got to underscore the word partner. These relationships are partnerships at their core. Even though GPs are not members at ILPA, it is really important that we have those open channels of communication and dialogue. As an example, we have worked on a new guidance this year for which we went out directly to a lot of GPs to really understand what their perspective was and what they are trying to put across. Is what we are recommending feasible? Is it reasonable, does it feel fair? While meeting the needs of the LPs and completing that task respecting all parties at stake.
We have both formal and informal engagement with the GP community over the course of the calendar year. We have the ILPA summit which is a fantastic opportunity for 600 people to come together in person to talk about issues that matter and also to meet new prospective partners. But we also run a couple of invitations only round tables -- one in New York, one in London, where we go out to thought leaders from the GP community -- those founding partners who set the tone at the top for their firms and who have a lot of power in their industry. We invite them to a conversation with us and members of ILPA’s board… We set the scene, create the vessel and they have an incredible conversation over two days. I think having both formal and informal engagement with the GPs is critical so going out on any piece of guidance that we do and making sure that we have that input, making sure that we have regular conversations…"
About investments in the Tech industry:
JC: "Certainly, Tech has been the bright spot knowing what we have been going through with the pandemic. We have been asking these questions repeatedly since the start of Covid -- I think we have had 7 or 8 town halls or webinars with members asking them to take their polls for different points in time. This has been a strikingly fast-moving evolution for our industry both in terms of how quickly a lot of portfolios rebounded or how that liquidity position rebounded when you saw the recovery faster than expected and faster than public markets. And also just seeing how covid has impacted different sectors. It has given LPs pauses where they might be underweight or overweight to certain strategies… Tech being one where LPs maybe had a step back and now they are realizing “we missed a beat here” or they had a very robust real state portfolio and they are thinking long term, or energy which has been under the microscope for a long time…"
Palico is the leading digital marketplace for private equity primaries and secondaries specifically designed for fund managers and institutional investors.
Secondary Platform: Palico's secondary marketplace, designed by PE industry experts, standardizes the process of selling and buying PE fund interests -- especially for smaller transaction sizes (~$2 - $20M). The marketplace features nearly all traditional major secondary funds in addition to hundreds of non-traditional/opportunistic buyers. From single family offices to large pension funds, LPs are now a few clicks away from participating in and enjoying the versatility that secondaries provide to their PE portfolios.
Primary Platform: Palico's primary platform is a comprehensive fundraising solution. GPs have access to a full array of digital tools to communicate and nurture prospective investors, including: Virtual Data Room, Messaging Module, Stats for fundraising performance, and Newsroom. Those tools are complemented with a matchmaking algorithm that alerts a vast LP member base (over 2,800 LP members and counting) of new fund investment opportunities and a notification system that notifies the LP network when the Newsroom is updated with major milestones and events.