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PE best practice study underway

RCP & Partners, the European-based fiduciary rating agency established in 1998, is carrying out a survey of 50 private equity and venture capital firms across ten countries. The aim is to establish best practices, seek transparency on how value is created and how much it costs, provide measurable metrics on operations and analytics on practices for monitoring tools as well as providing benchmarks for institutional investors, rating agencies and consultants to assess risk.

Participants in the survey will be charged EURO7,500 and take part in a series of questionnaires, interviews and focus groups during September and October, which will be analysed by year-end leading to conclusions and debriefings in January next year. Those taking part are offered a ten per cent discount on a fiduciary rating booked with RCP Partners within six months of this survey being carried out. The ten per cent discount equates to a EURO7,500 saving on the full rating service.

Robert Pouliot, based in RCP’s Swiss office, notes that in part the survey is being driven by active LPs’ expectations of best practice and to identify mismatches in terms of good compliance on both the buy and sell sides of the industry. The survey findings will doubtless assist RCP in building its fledgling private equity and venture capital rating business. Pouliot believes some of the push for private equity firms to be rated will come from LPs that wish to improve their fiduciary control but also says that GPs are increasingly aware of good fiduciary practice and of the usefulness of getting a rating to reinforce trust. He also believes a rating will in some cases assist the fund raising process – an alluring prospect for many private equity fund managers in this difficult fund raising market.

Although a new concept as far as most private equity fund managers are concerned Pouliot believes the biggest obstacle to getting the survey completed is in fact time. He aims to achieve diversity in the respondents between direct investors and fund-of-funds investors.