An article in Investment Europe makes the call for data format standardization between GPs and LPs. It is a report that reflects a growing awareness that PE needs to make a shift to a more mature information management model for data exchange.
Ernst & Young said as much in its recent report entitled PE Evolution of the Operating Model (See Infographic) The flow of information betwee GPs and LPs could be improved considerably if such a move was made, say both sources. Nevertheless, the industry has come a long way from suffering from a sheer lack of information being provided by GPs to LPs and intransparency. In recent years, there has been recommendations and guidance from industry bodies such as the Institutional Limited Partners Association (ILPA).
One result of which is that large GPs may be producing 20-30 investor-specific packs of information every quarter. For the LPs it means that, if they have 2 to 300 fund positions, they are getting the data in 2 to 300 different formats. Many firms are using PDF and Xcel formats to deliver information, but the data is not standardized. If it was, there could be a freer flow of information electronically, which would save everyone time and money.
The IE article points out that the situation facing private equity is in sharp contrast to other areas of financial services. (Image source: E&Y)