Advent’s recent fundraising success was attributed to its ability to return money to LPs, according to Unquote, which we covered above, but an influential LP and gatekeeper says that transparency and reporting is just as important. Hamilton Lane says investors are choosing one fund manager over another based more on reporting capabilities than ever before, as reported in Private Equity Wire. Hamilton Lane is putting its money where its conviction is by investing in a technology platform for its clients and other LPs.
In a quote in the article, Erik Hirsch, chief investment officer of Hamilton Lane said that LPs have difficulty tracking earnings or debt levels across their private equity portfolio and that technology is the key enabler of increased transparency. Potential investors are requesting the kind of reporting and transparency provided by public equities. The new portfolio management platform will be offered by Hamilton Lane to its clients and other LPs in 2013.
It appears LPs are not the only ones moving towards an advanced technology future, as GPs also exhibit awareness that there needs to be better reporting and insight into underlying portfolio companies. Nearly half of the GPs in the poll felt that they fall short in their limited partner reporting or struggle to understand the reporting demands of their LPs. A poll by iLevel found that 50 per cent of GPs at a recent industry event plan to increase their back-office headcount over the next 18 months with an eye to improving their ability to meet LP reporting demands. (Image source: iLevel)