Last month, the Institutional Limited Partners Association (ILPA) released an updated Reporting Template and new Performance Templates in a move to “enhance standardization, transparency and comparability in reporting across geographies for private funds.” The release follows an initiative initially launched by ILPA in January 2024 to align its 2016 Reporting Template with the quarterly statement rule under the U.S. Securities and Exchange Commission’s Private Fund Adviser Rules. When the Private Fund Adviser Rules were vacated in June 2024, ILPA transitioned to an industry-driven, “bottom-up” approach, culminating in the updated Reporting Template and new Performance Templates.
Updated Reporting Template
First released in 2016, ILPA’s Reporting Template was developed to promote uniform reporting and transparency across the private funds industry. While not mandatory (the Reporting Template is a recommendation only and is intended to supplement a fund’s standard financial disclosures), the 2016 Reporting Template was widely endorsed by many large institutional investors and has become a common side letter request fielded by private fund sponsors. The updated Reporting Template is designed for closed-end private funds and maintains key structural elements of the 2016 Reporting Template with the goal of enhancing others. Key changes include:
- Cash/Non-cash Flows. Additional detail on cash/non-cash flows to capture offering and syndication costs, placement fees, and partner transfers.
- Management Fees. New gross-to-net reconciliation for management fees and step-by-step netting of rebates, waivers, and offsets.
- Partnership Expenses. More granular partnership expense reporting, including separate line items for internal chargebacks to isolate expenses allocated or paid to the general partner (GP) or related persons, as well as more granular reporting for certain categories of external partnership expenses.
- Capitalized Fees/Expenses. New line items to net capitalized transaction fees and expenses from portfolio gains.
- Incentive Allocation. New reporting and granular accounting of incentive allocation amounts.
- Uniform Reporting. Removed the tiered reporting structure in an effort to promote a uniform and more granular level of reporting. (The 2016 Reporting Template included a two-tiered reporting structure: Level 1 reporting for high-level summary content (and the minimum level of reporting that ILPA recommended at the time) and Level 2 for more granular, itemized reporting.)
Fund sponsors reporting on the 2016 Reporting Template should review their corresponding side letter or other obligations to confirm if transition to the updated Reporting Template is required and, if necessary, discuss expectations for implementation with their investors. ILPA recommends that the updated Reporting Template replace the 2016 Reporting Template on a go-forward basis for funds still in their investment period during Q1 2026 or that commence operations on or after January 1, 2026.
New Performance Template
The new Performance Template is intended to “standardize return calculation methodologies in the private equity industry by creating a framework for capturing performance metrics and corresponding contributions/distributions.” Key features include:
- Cash-Flow Mapping. Detailed cash-flow mapping for both fund-level and portfolio-level performance.
- Standardized Performance Metrics. Standardized reporting for performance metrics (IRR and TVPI/MOIC) with breakout reporting for relevant gross and net figures to show performance both with and without the impact of fund-level subscription facilities.
- Two Versions. A “granular” version for GPs who use fund-to-investor cash flows for gross fund-level performance and itemize each capital call and a “gross up” version for GPs who use fund-to-investment cash flows for gross fund-level performance or do not itemize capital calls and instead gross up cash flows.
As with ILPA’s Reporting Template, the new Performance Template is not mandatory and it remains to be seen how widely adopted or endorsed the performance template will be by industry participants. ILPA recommends that the Performance Template also be used on a go-forward basis for funds commencing operations on or after January 1, 2026, with first delivery occurring four full fiscal quarters after commencement of operations.
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