Financial Services

Institutional Limited Partners Association updates: GP-led restructurings and a focus on diversity and inclusion within private equity

Published on 15th Oct 2018

The Institutional Limited Partners Association (ILPA) has been very busy of late, with its recent publication of several resources developed to support the advancement of diversity and inclusion within the private equity industry, and plans to publish guidance on GP-led restructurings as early as the end of the year.

Fund managers should be aware of these developments from the ILPA, and be prepared to address questions arising from investors.

GP-led restructurings

ILPA plans to update its private equity principles with guidance on GP-led restructurings, possibly by the end of this year.

Reports in the private funds press suggest that this update will aim to:

  • remove ambiguity over fund extensions and fees charged at the end of a vehicle’s term;
  • provide recommendations to address conflicts of interest which may arise in these types of transaction, particularly through providing guidance on: (i) market testing for pricing on assets, (ii) the involvement of an intermediary, and (iii) disclosure of conflicts from GPs;
  • recommend that fairness opinions be sought on valuations and prospective deals; and
  • focus on restructurings (the update will not at this stage include guidance on stapled deals).

We will cover this update in more detail when it is published by ILPA, but in the meantime fund managers should anticipate being asked more questions on GP-led restructurings by potential investors in the future.

Diversity and inclusion within private equity

On 24 September 2018, ILPA published resources as part of its work on advancing diversity and inclusion within the private equity industry.  Fund managers should be aware that this may lead to investors requesting more detailed information in this area.

As well as providing guidance for GPs, investors and portfolio companies on developing codes of conduct on harassment, discrimination and workplace violence, ILPA has updated its standard due diligence questionnaire.

The new version of the questionnaire now includes:

  • a template for fund managers in certain regions, including the UK to report on the race/ethnic and gender diversity in their teams; and
  • a new Section 14 with questions on fund managers' policies on hiring, promotions, family leave, discrimination and other areas.

Further details, including links to these new resources, can be found here.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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