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ILPA Guidance for Institutional Limited Partners…and the Implications for Private Markets Fund Managers

Institutional investors have long advocated for themselves with private markets fund managers, whether for reduced fees, increased transparency, custom reporting, or more favorable limited partnership agreements, to name a few. But this highly fragmented approach has proven inefficient — and undoubtedly frustrating — for LPs and GPs alike.

What is ILPA?

The Institutional Limited Partners Association, better known as ILPA, stepped in to unify the voices of institutional LPs, bringing them together for education, resources, and networking purposes, while providing cohesive guidance and best practices to advance LPs’ interests. ILPA publishes a variety of industry guidance for LPs and GPs, including Principles 3.0, model LPAs and fund reporting templates.

ILPA’s member entities include public and private pensions, endowments, foundations, family offices, insurance companies, sovereign wealth funds and other institutional investors. In aggregate, allocations from ILPA’s 500+ global institutions comprise about 50% of capital invested with private equity fund managers. ILPA’s members include over 5,000 professionals in 50+ countries.

Clearly ILPA’s membership represents a powerful voice. As such, private markets fund managers should be aware of — and prepared to follow — ILPA’s guiding principles for alignment of interest, governance and transparency.


What Institutional LPs Seek…and How GPs Can Prepare

In this introductory blog, we share ILPA’s guidance for what LPs seek and GPs should know in three areas related to fund administration:

  1. Detailed financial reporting
  2. Operational transparency
  3. Independence and governance


ILPA guidance for detailed financial reporting

One of ILPA’s foremost goals is to promote transparency and alignment of interests between LPs and GPs. ILPA also advocates for uniformity in disclosures to LPs.

In 2015, ILPA surveyed its members and found that more than half of the institutions had developed custom templates to capture fee and expense information beyond that provided in standard GP reporting packages. In response, ILPA launched an initiative to establish more robust guidelines for fee and expense reporting and compliance disclosures.

ILPA packaged the standardized guidelines in financial reporting templates, enhancing the templates and adding new ones over time. LPs benefit from increased transparency and consistent information across fund managers. GPs benefit from being able to provide standardized reports following the ILPA templates, thereby reducing the need for custom LP reports. A sampling of these standardized reporting templates includes:

  • Capital activity template: detailed capital call and distribution schedules
  • Fee income template: detailed schedule with fees, expenses, carried interest and reimbursements
  • Portfolio company template: details about each company, including invested capital and performance


ILPA guidance for operational transparency

In 2017, ILPA issued guidance for greater disclosures and clarity in partnership agreements regarding subscription lines of credit. But with inconsistencies remaining, ILPA in 2020 released additional guidance for quarterly and annual disclosures to provide LPs the necessary visibility to monitor the impact of subscription lines on both exposure and performance.

Levered and unlevered metrics. Because leverage is utilized by some managers, but not all, it is difficult to compare fund metrics across the industry. ILPA therefore provides specific guidance that fund managers report unlevered return metrics in addition to any levered metrics.

The following excerpt from ILPA guidance illustrates the effect on performance data of delaying the first capital call — by using a subscription line of credit.[1]

Year Transaction Type Cash Flows
(without line of credit)
Cash Flows
(with 1-year line of credit)
Cash Flows
(with 2-year line of credit)
1 Investment -100
Management Fees -2
2 Investment -100
Interest -4
Management Fees -2 -4
3 Investment -100
Interest -8
Management Fees -2 -2 -2
4 Management Fees -2 -2 -2
5 Management Fees -2 -2 -2
6 Management Fees -2 -2 -2
Realization 162 162 162
  IRR 6.62% 7.14% 7.98%
  TVPI 1.45x 1.40x 1.35x


Terms and costs of the line of credit. Lines of credit also impact investors’ cash management strategies, as required paydowns may lead to large, unexpected accumulated capital calls. To address this liquidity risk, ILPA also released guidance for transparency into the key terms and costs associated with subscription lines of credit.


ILPA guidance for independence and governance

Investors — specifically institutional investors — seek a layer of independence and governance at the fund manager when it comes to the reporting structure. Fund administrators provide this additional layer of independence, as well as reporting and operational guidance, to ensure investor reporting and economics are in line with governing documents.

Institutional investors know that fund managers who’ve incorporated ILPA best practices for reporting, including ILPA templates and performance metrics, are following the industry “gold standard.”


How Fund Administrators Assist with the Implementation of ILPA Best Practices

Implementing ILPA’s reporting templates can be complex, but the benefits are clear-cut for both investors and fund managers. By outsourcing fund administration, GPs can minimize the cost and effort of satisfying institutional investors’ ILPA reporting requirements.

Fund administrators have the software solutions and technology to automate ILPA templates across a manager’s LP base. Fund administrators also have extensive in-house experience with ILPA-recommended reporting standards and performance metrics. Plus, as noted above, institutional investors favor the independence of third-party fund administration over in-house solutions.

ILPA empowers institutional limited partners through a unified voice and standardized approach for requesting transparency and disclosures from private markets fund managers.

At Ultimus LeverPoint, we see first-hand the influence of ILPA guidelines on institutional investor requests. Fund managers increasingly are being asked to follow ILPA recommendations, specifically with respect to fund reporting. ILPA’s reporting guidance minimizes the need for custom investor reports. That’s a win-win for GPs and LPs alike.


11831725   01/12/2021


[1] ILPA website download: 2020 Guidance – Enhancing Transparency Around Subscription Lines of Credit


Strategic Benefits of Outsourcing Fund Administration

Making the decision to outsource Fund Administration services is one of the most important decisions that a Fund Manager can make; increasing time and efficiencies both for themselves and for their investors.

In recent years, outsourcing fund administration has become widely accepted as an industry standard. Traditionally, most Fund Managers opted to keep fund administration in-house. Yet, the growing volatility, uncertainty, and complexity of the fund world and investor expectations has made self-administration a mounting distraction. The increasing complexity of fund types and structures is taxing manager resources and expertise, while more sophisticated investors are driving the demand for independence and continued investments in technology, controls, and transparency. Outsourcing allows Fund Managers to focus on the people, process and technology needed to tackle the evolving financial reporting requirements and expectations of funds and their investors.

Strategic benefits of outsourcing: People, Process, Technology, Capacity to Focus.



Relationships and communication are the foundation for a successful Fund Administration partnership. Making the right Fund Administrator choice is essential. Cultural fit, technical ability and capacity are all critically important; a Fund Manager is not just partnering with a Fund Administrator, they are partnering with the human capital of the firm. The goal of a Fund Administration relationship is a long-term partnership that grows and flexes with a Fund Manager’s needs. Fund Administrators should be viewed as an extension of the Fund Manager’s team, a strategic partner, and a valued part of the business plan.



Limited Partners are growing in sophistication and requiring more of Fund Managers, notably tighter processes and controls. Many institutional investors require the Fund Manager to hire a Fund Administrator with industry accepted credentials. The most sought-after credential is the SSAE18 SOC 1 Type 2 Audit Report (System and Organization Control Report). The SOC 1 report confirms that a Fund Administrator has the proper controls and procedures in place to reduce risk when it comes to potential errors. Limited Partners also focus on both the Disaster Recovery and Cybersecurity Policies. The chosen Fund Administrator should have documented and tested Disaster Recovery and Cybersecurity Policies, as well as Business Continuity Plan, which lays out the process for continuous service and access to client data in the event of disruptive events.



In 2020, private equity firms are relying on robust technology products for accuracy and instant responses. Technology has both tangible and intangible benefits, which is why it is essential that all fund services are delivered through industry leading platforms.

Fund Administrators understand how crucial technology is to offering and maintaining reliability to their clients; having enhanced software and analytics specific to the alternative investment industry is paramount. Platforms such as Investran, eFront and VPM allow data to be tracked and maintained securely. Using a secure, sophisticated platform not only minimizes the risk that can be found using excel spreadsheets, it also allows for transparent and secure reporting. The data input and output are performed in a more controlled and reliable environment through these platforms. Access to state-of-the-art investor portals, allows Fund Administrators to store and distribute investor correspondence through a secure web-based platform. These portals allow access to online real-time data and reporting to Fund Managers, General Partners and Limited Partners. The cost to individual managers of investing in the right technology can be expensive and overwhelming. Partnering with a Fund Administrator who invests in these platforms allows Fund Managers access to advanced technology while avoiding much of the cost, process and time-commitment of in-house implementation and on-going maintenance.

Capacity to Focus


Outsourcing Fund Administration enables managers to focus on core responsibilities: deals and investment strategies. Managers who divert focus from portfolios and investments to manage the reporting requirements mandated by the LPA face an ever-increasing challenge. Choosing to outsource allows Fund Managers to focus on what they do best – investing. Outsourcing allows Fund Managers to focus on providing a maximum return on investments for their investors, concentrating resource and expertise in evaluating and making deals, investing and implementing unique investment strategies.

Making the decision to outsource Fund Administration services is one of the most astute decisions a Fund Manager can make; increasing efficiencies both for themselves and for their investors. As reporting demands grow, the need for transparency increases and the importance of the right Fund Administrator becomes more important. Engage with a Fund Administrator that focuses on People, Process and Technology. Reach out to Ultimus LeverPoint to discuss ways outsourcing makes sense for you. High quality service from our first-class technical professionals increases your capacity by removing the complexity of your day to day administrative burden. We are here to partner with you through providing boutique services with institutional strength.


11595667 12/8/2020


3 E’s: Best Practices for Engaging Clients

3 E's: Best Practices for Engaging Clients

During the past few months, we have all ridden an emotional rollercoaster, with ups, downs, loops and lots of adrenaline. Business continuity plans have proved essential and readiness to deploy, monitor and adapt have become the necessary norm. But this is also a time when client and prospect engagement is paramount to the sustainability and growth of your investment firm’s business.


Volatility Reminds Us to Hedge – There May Be a Better Way to Do That

Volatility Reminds Us to Hedge - there may be a better way to do that

Many investment managers and asset owners are struggling with a new reality and working to restructure portfolios, all while trying to shrug off a 10-year bull market euphoria-induced hangover.  For the last decade, it seemed like the U.S. equities market knew no limits, with active managers struggling to even come close to meeting their benchmarks. Allocations to alternatives became less of a concern with each passing stock market record. Strong economic fundamentals – record low unemployment, wage growth, strong housing markets – continued to boost certainty that the party was not ending anytime soon.


Spending Too Much Time Managing Data? Reevaluating Your Middle Office Environment

With the high volume and complexity of investment products and asset types in the current volatile and uncertain market, many asset managers may be spending too much time on middle office functions, while missing opportunities to improve client relationships and focus more on core business decision-making in today’s constantly changing industry.


Redefining Innovation: The Ongoing Creation of New Ideas That Generate Value for Clients

Redefining Innovation: The ongoing creation of new ideas that generate value for clients

In our latest installment of  #TALKtoUltimus, we interview Bill Hortz, Founder and Dean of the Institute for Innovation Development, and explore best practices for companies wanting to create a culture of innovation.

Many investment firms and managers use the words innovation and tech-driven as a brand promise. While there are many ways to define it, tech-driven means using proprietary technology to deliver something that is better, faster, and cheaper than if you do it yourself. According to Hortz, tech-driven means just using technology to do work more efficiently. But in his view, it’s not necessarily something that changes a culture. His hypothesis is that investment firms really want to have a reputation for being innovative (2.0), not tech-driven (1.0).


Best-in-Class Customer Service: The Intersection Between Strategy and Culture

Ultimus recently kicked off a new interview series entitled, #TALKtoUltimus. 

Below is an introduction to an interview leadership coaching expert, Tim Kight, Founder/CEO of Focus 3. In this podcast, Tim outlines what it means to be a client-centric organization, and the principles and leadership needed to help organizations deliver best-in-class customer service.

Many companies say they are best-in-class or client-centric organizations in their branding and mission statements, but there is a definite disconnect between those words and the reality of how they are translated down through the ranks to front-line employees interacting directly with clients.


Evaluating Your Legal Fund Administration: Best Value Tips to Consider

The fund administration industry is a complex world, and regulatory burdens seem to grow with each passing year. This specialized work can be daunting, even for larger investment firms that have internal legal departments. Investment professionals interested in outsourcing this work should consider letting legal fund administration professionals worry about the rules and regulations – so they can concentrate 100% on productivity goals and meeting the firm’s bottom-line.

For boutique investment firms, having skilled and knowledgeable partners are even more important so internal resources can be dedicated to clients and increasing the firm’s operational bottom line.

When it’s filing day and there is a last-minute question or an unusual situation develops, it’s critical that large and small investment firms can rely on a team of dedicated subject matter specialists.

Managing Current Trends

The trend over the last few years has been that larger service providers are outsourcing work to foreign countries to cut costs or eliminating that service altogether. So, it’s more important than ever for investment firms, managers and fund families to gauge the depth and experience of current legal fund administration resources to lower their cost of total ownership.

Reducing Workload

Whether you’re a boutique investment firm needing outside professions, or a larger investment group that’s looking to complement an internal department, a great legal fund administration team should help reduce the time internal resources are spending to complete legal tasks. A proficient outsourced team should have lawyers and paralegals with years of experience working on corporate governance and regulatory filing responsibilities. They should also be able to produce those deliverables more efficiently than current processes.

If you are considering making a change to the fund, your legal administrator should be able to outline the rules, highlight any common pitfalls, note areas that may need counsel’s input, explain the forms or paperwork that will be necessary, and then draft that paperwork and put it in front of your investment firm’s staff for review.

This type of service streamlines the entire process from beginning to end, and frees the firm from having to dig through a mountain of rules so they can then refocus on client-oriented and revenue-generating goals.

Does your current legal fund administration team just passively wait for the firm to provide direction, or expect the firm and your outside counsel to provide it with documents? Perhaps it’s time to consider whether current services are saving you any time or money at all. 

Best Value Differentiator

A time-tested way for investment firms to secure best value is making sure that legal fund administrators work hand-in-hand with the firm’s counsel. An outstanding legal fund administration team should be generating templates, drafts and other documents for every project a fund undertakes including contract forms, registration statements, and quarterly filings. They should also present a detailed, finished document to your fund’s counsel and internal executives for review, and be available to answer questions about the purpose and contents of those documents. It’s an important time-saver, and can help reduce the fund’s overall cost of ownership.

Additionally, if the firm handles legal administration internally or expects your counsel to provide documents for filing, a skilled legal fund administration team can narrow the scope of counsel’s role to that of review, rather than paying full associate or partner rates.

Another avenue of value-add that is less obvious, but just as important – the degree to which legal fund administration interfaces directly with the fund’s counsel. A full-service legal administrator with skilled, experienced attorneys on staff is able to minimize counsel’s time spent on operational emails and phone calls. What may have been an extensive phone call could be expedited when handled directly between subject matter specialists. If your current legal fund administrator wants your firm to handle communications with counsel, it might be time to consider whether this hidden cost is silently inflating operating expenses.

Deep Bench: Delivering Best Practices

Another often overlooked benefit of a skilled outsourced legal fund administration team is the deep level of dedicated professional experience that attorneys and paralegals have with the Investment Company Act of 1940 (’40 Act). Even the most experienced firm attorney may split time working on fund issues, mergers and acquisitions (M&A), and general securities work. But a dedicated outsourced legal administrator only works on fund issues, bringing a wealth of knowledge to the table on the nuts and bolts of daily operational requirements.

Further, a skilled, outsourced team works side-by-side with the fund’s accountants, compliance staff, and operations teams. Beyond being a simple repository of regulatory knowledge, a professional legal fund administration team combines an understanding of fund mechanics, with an appreciation of the actual practical effects of the rules and regulations. For example, the firm’s fund counsel may be able to tell whether a certain action is permissible, but a skilled legal administrator will know to warn about operational headaches that the otherwise permissible action may cost the firm – knowledge gained from actually working through those same headaches in the trenches.

Solving operational issues is key and where a skilled outsourced legal fund administration team provides real value. Does your firm’s current resource sit back and wait for direction or utilize expensive consultants to solve problems? If so, it might be time to make a change to find a resource that proactively listens to your firm’s needs, and offers workable, practical solutions based on years of subject matter expertise.