Calpers uses ILPA template to get detailed portfolio company-level fee data

California Public Employees’ Retirement System has been asking its private equity managers for detailed portfolio-company-level fee information, according to three people with knowledge of the system.

The system, like other large public pensions, in January started sending its general partners the fee and expense reporting template created last year by the Institutional Limited Partners Association. The system sends this request out every quarter, one of the people said.

The template was designed to include in one place detailed information about fees and expenses, including at the portfolio-company level.

“The template provides for reporting of fees charged to portfolio companies, both the fee types and amounts offset against management fees or partnership expenses and fee types not subject to offsets,” said Jennifer Choi, managing director of industry affairs at ILPA.

It’s not clear how Calpers had received this type of information in the past. Many GPs report this information in varying ways, which can lead to LPs receiving unwieldy data dumps.

Itemizing fees

The template itemizes fees charged to portfolio companies. Specific fees in the template include advisory fees, broken-deal fees, transaction and deal fees, directors’ fees, monitoring fees, organizational costs, placement fees and capital markets fees, Buyouts has reported.

The template also asks GPs to disclose information about regulatory examinations and interpretations on how to view the results of those exams, according to a statement endorsing the template from California State Teachers’ Retirement System in February.

“We view this development as just the first step toward a more transparent and consistent industry standard of reporting the fees and costs generated by our partnerships with the general partners,” said Chris Ailman, Calstrs chief investment officer, in the statement.

Calpers has been getting reasonable cooperation from its GPs, one of the people said. A few GPs have been reluctant to go far back in time to try and track down how much a portfolio company they may no longer own paid in fees, the person said.

“Some do that and others say, ‘we’re not doing that, it’s too time-consuming, too complicated,’” the person said.

One GP who requested anonymity said the firm provides all the requested information, but not in one place. “It will take some time before we have the systems in place to do this efficiently on a mass basis, but for LPs who ask for it, we fill it out,” the GP said.

Carlyle Group endorsed the template in January. “We look forward to working with ILPA on the rollout of this reporting initiative and have a team working to implement this system at Carlyle,” the firm said in a January statement.

It’s unclear whether Calpers will make its portfolio-company fee information public, as it did with its tally of the amount of carried interest it paid out to GPs since inception of the system’s private equity program.

Calpers said last year it paid $3.4 billion to its active managers in carry since 1990 and collected $24.2 billion in realized net profits during that time.

Joe DeAnda, a spokesman for Calpers, did not return several emails requesting comment.

Action Item: Contact ILPA for more information: info@ilpa.org