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GP-LP relationships and accelerated shifts to digital
07 March 2021
LPs and regulators have been trending in the direction for more
insight into the holdings and exposures of private equity funds.
When the crisis took its toll, the private markets were impacted at
the front-end, and the volume and depth of reporting- both ad-hoc
and ongoing- increased even further.
During the SuperReturn North America Virtual Conference, nearly
200 panelists including GPs and LPs alike spoke about the
importance of data-driven decision making, communication between
stakeholders, and transparency across portfolios. One of the
resounding themes across panels was that the GPs who had robust
processes and tools in place to provide insight into the status of
their funds and portfolio companies came out favorably during this
time. Those with robust systems were able to appease their LPs in a
timely manner by responding to requests with "Crisis Dashboards,"
in-depth reports on their portfolio companies, and fund
performance.
Some key takeaways from a few panels on LP-GP relationships
during the SRNA conference:
Communication and transparency between LPs & GPs during the
pandemic noticeably increased with web conference tools being
heavily utilized
The frequency and volume of information flowing from portfolio
companies to GPs and from GPs to LPs has heightened during the
pandemic
GPs who were able to provide in-depth information and accurate,
timely data on portfolio companies came out more favorable
Both qualitative and quantitative ESG data points are being
tracked more rigorously and will continue to be relevant both in
on-going reporting and fundraising
LPs would like increased transparency and direct communication
with GPs to become the norm and continue post-COVID
Technology will play a major part in providing transparency
across the spectrum and will help strengthen LP-GP relationships
going forward
Robust data collection, monitoring, and reporting procedures are
not only necessary in times of stress and uncertainty but are also
becoming a best practice across the private markets. On panels
discussing LP-GP relationships during the conference, LPs expressed
their desire for continued transparency and direct communication
post-COVID. A key part of any alternative investment management
firm is having the right technology and processes in place to
deliver better results for themselves, their portfolio companies,
and their investors.
To learn more from our private market experts, please reach out.
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