Firm To Sell IRR Data Gleened By FOIA

The private equity disclosure debate took a for-profit turn last week with the launch of an online database featuring performance data on over 1,100 investment funds. The new product is the end result of a year spent filing Freedom of Information Act (FOIA) requests with publicly financed investors like state pension funds, and is the first searchable database of fund-specific private equity information. And, predictably, it’s more than just a bit controversial.

“We believe that there is going to be significant interest in this, especially considering [recent private equity disclosure battles surrounding] UTIMCO and CalPERS,” says Mark O’Hare, head of U.S. activities for Private Equity Intelligence (PEI), the Montecito, Calif.-based firm that produces the database. O’Hare and London-based partner Nick Arnott last worked together on a U.K. equity ownership data provider named Citywatch, which was sold to Reuters in 1998. At the end of 1997, Citywatch listed net assets of $340,370.

The pair’s new venture provides net internal rate of return (IRR), cash in/cash out and value multiple information for most of the funds in its system. It also allows paid subscribers to cross-reference funds of interest against historic benchmarks. O’Hare declined to discuss specific subscription prices, except to say it’s competitively priced against other private equity data providers.

It’s important to note that one of those competing companies is Venture Economics, which also serves as publisher of this newsletter. Jesse Reyes, vice president of product management with VE, says his main concern as a consumer would be the validity of performance data based on LP reports, instead of on GP financial reports.

Several general partners raised the same issue when contacted by PE Week last week. One early-stage investor, speaking on background, says that the main issues involved reporting method consistency between different firms and the issue of whether the IRRs were primarily influenced by strategic or macroeconomic issues. “It’s like evaluating CEOs based on their salaries,” he explains, although he adds that it’s “always interesting to see how everyone is doing.”

There is also the issue of dates, with some of the database’s results being based on quarterly reports from different quarters. O’Hare acknowledges some of these difficulties (even going so far as to include a disclaimer on each page), but insists that the information is as valid as that provided by other firms. “The issues of reporting dates and methodologies and consistency are shared by everyone doing this,” he says.

Email Dan Primack