ILPA European Tour 22-26 JUNE 2015 AMSTERDAM, COPENHAGEN, LONDON, PARIS
“ The Membership Committee remains focused on cultivating a diverse global membership. Our newest members represent 6 continents and range all across investor types.” Robert van Schaik, SHELL - Membership Committee 318 Chair ORGANIZATIONS 384 OFFICES WORLDWIDE 68 EUROPEAN OVER 2,300 INDIVIDUALS
The ILPA 3 Chairman of the Board Board of LPs Industry Membership Education GP Summit RB & S Affairs Committee Committee Committee Committee Committee
European Membership 4 Europe 15% Other Endowment United States Family Office 9% 4% 62% 11% Insurance 18% Public Pension 29% Canada 11% Asia 4% Africa Middle East Oceania 1% 3% Corporate Pension 2% 29% South America 2% Members by Region European Members by Type
Networking 5 GP SUMMIT REGIONAL Nov. 3 -5, 2015 EVENTS 16 Events LP Registration is around the world each OPEN! year 68 GPs already MEMBERS-ONLY Registered! CONFERENCE Save the Date! June 7 – 9 2016 in Chicago
Education 6 GP Summit: LP-Only Day Nov. 3rd One-day Professional Development Seminar: Decision Making Strategies Workshops catered ILPA Executive Education returns to ILPA members: to Europe in September: Coinvestments, Level I and Level II Module 3 – first Secondaries, time in London End of Life Issues Next Webcast: Buyouts - Pricing and Leverage: Where Are We in the Cycle? Upcoming: ESG
Research 7 Annual Survey of Limited Partner compensation – Now LIVE Support Peer Compensation Benchmarking Individual Responses Remain Anonymous View 2014 Results in our Document Library Answer online @ ilpa.org/compsurvey
2014 Compensation Survey 8 Results Compensation Trends available on: Experience levels, Organization Types, Geography Median Compensation by Position* $600k $500k $400k $300k $200k $100k $ CIO / SVP Director of PE / Sr Portfolio Mgr Portfolio Mgr Core Services Sr Associate / Associate Analyst Core Services / MD / VP Mgr / Investment Ofc Compliance Compliance Ofc Analyst Public Pension - Base (148) Public Pension - STIP (61) Public Pension - LTIP (17) Not a Public Pension - Base (151) Not a Public Pension - STIP (113) Not a Public Pension - LTIP (45) Source: 2014 ILPA Compensation Survey – Respondents’ private equity experience by position (25th, 50th, 75th percentiles). Number of respondents per position in parentheses (n)
Benchmark Calculator 9 Create custom benchmarks ‘Slice & Dice’ the ILPA Private Markets Benchmark Generate returns in over 20 currencies Members can access the Calculator for only $5,000/yr. ($20,000 discount) by contributing their fund list to ILPA
Industry Affairs 10 Aligned Global Public Communicate with Interest Associations Media Other US: SIFMA, NASAA, CII, AFL-CIO, FT, PE News - Dow Jones, Influencers IIF, CFR, US Chamber, FSR, AFR, WSJ, PEI, PFM, FundFire (FT), PREA, CEIBA PE Hub, Reuters, The Hill, Roll EU: NAPF, Dutch Federation Call PE Pensions Associations Global: Institutional Investors Roundtable Advise National and Regulators Global Regulators Network Global PE and US: SEC Examinations & VC Associations Enforcement, Dept Labor, Treasury US: ACG, NVCA, PEGCC, SBIA EU: ESMA, AMF, FCA EU: EVCA, BVCA, NVP, DVCA, AFIC, Global : Financial Stability Board AF2I, LPEA Policy Makers Global: ColCapital, AMEXCAP, LAVCA, ABVCAP, EMPEA Educate EU and Member States Government EU: European Commission, Parliament/ECON Committee members US: None to date
2015 Global Policy Priorities 11 Educate Stakeholders on the Role of PE in Investor Portfolios Promote Prudent Regulation • Solvency II, IOR Pensions Directive – risk weightings, reserve requirements • AIFMD, third country marketing passport Influence Disclosure and Registration Requirements • SEC registration (HR 1105) and examination priorities and findings • New rules on compensation disclosure and fee caps (UK/EU) Shape Broader Financial Market Reforms • Capital Markets Union, regulatory relief proposals (EU) Understand the Impacts of Comprehensive Tax Reforms • Tax treatment of carried interest in US (Neutral view) • Base Erosion/Profit Shifting initiative and impact on fund domiciles (EU) Explain PE’s Broader Role within Economic Policy
12 APPENDICES
13 Annual GP Summit Meeting Scheduling System LP-Only Day: ILPA AGM, revamped in 2014 to ensure Professional Development compliance with European Seminar and LP-Only Dinner fund marketing requirements; (sold out 3 years in a row!) European LPs receive early Professional Development access to make GP selections Seminar: Decision Making (i.e., reverse solicitation) Strategies presented by George Wu, University of Theme is “Distressed and Chicago Booth School of Special Situations” Business Keynote: Billy Beane of Moneyball fame
Members-Only Conference 14 2015 in Pasadena a huge success. 170 LP only attendees, spanning 101 organizations 9 workshops, past years’ workshop content available on ilpa.org
ILPA Institute 15 Institute in Europe Join us in September for two of our Executive Education Courses: September 14-16 Level I September 17-18 Level II Module 3: Executing LP Roles and Responsibilities – first time being offered in Europe Description for both courses can be found on ilpa.org
EU Capital Markets Union 16 Green Paper Key Points Unifying implementation and enforcement of current regimes and reducing barriers across member states. The preservation of National Private Placement Regimes (NPPRs) alongside a proportionate and workable third country passporting regime is essential to ensure EU investors can continue to access access top global non-EU funds. Greater EU-wide research on the true risk of long term and illiquid investment is needed to inform prudential regime requirements under Solvency II and IORPD. Crafting investment vehicle-neutral tax incentives that do not promote funds to the detriment of direct investments, or vice versa.
Member Views on AIFMD 17 Do you consider your PE program to be What impact have AIFMD registration at a competitive disadvantage to your requirements had on investor protections for non-EU counterparts in terms of access European limited partners? to managers as a result of the AIFM Directive? Somewhat Not sure, positive, No 11% 14% 31% Extremely negative, Neutral, Yes 23% 23% 69% Somewhat negative, 29% Source: 2014 ILPA Members Survey on AIFMD and Proposed Third Country Passport
Impact of AIFMD 18 Observed Change in Marketing Activity Impact of Changes to Home Country National among non-EU AIFMs Due to Lack of Private Placement Regimes Since the Marketing Passport Enactment of the AIFMD Somewhat positive Not sure 10% No impact 5% Not sure Decreased 33% marketing activity Increased marketing activity Somewhat negative Very 33% No change negative 19% 0% 50% 100% Source: 2014 ILPA Members Survey on AIFMD and Proposed Third Country Passport
19 Transparency: Best Practices for Investors JENNIFER CHOI, ILPA
A Transformative Moment? 20 “ When we have examined how fees and expenses are handled by advisers to private equity funds, we have identified what we believe are violations of law or material weaknesses in controls over 50% of the time.” – Andrew Bowden, Director of Office of Compliance, Investigations and Examinations, SEC, “Spreading Sunshine in Private Equity”, 6 May 2014
SEC Examination Process 21 “No No Exam Close Introductory Deficiencies? Field Work Comment Out Call ” Letter Understand Test theses. Develop Yes the firm; conclusions. Comment form theses. Letter No Enforcement Yes Enforcement? Process
SEC Examinations of GPs 22 Have any managers with which you invest In what portion of cases were there findings or recommendations issued by the SEC? gone through an SEC exam? Several (25-50%) A Few (10-24%) Many (More than No 50%) 5% Very Few (<10%) Yes I don’t know 52% 43% I don't know None (0%) Methods of Discovering Managers Underwent SEC Exam 50% 40% Other means (please explain) 30% Our own review of public sources (e.g., ADV 20% forms) The manager(s) notified us 10% 0% We inquired directly Source: 2014 ILPA Members Survey on SEC Exams.
Satisfaction with Disclosure 23 Level satisfaction with information from Level of Satisfaction with Format and managers about communications with Detail of Reporting on Fees and regulators Expenses 100% Very Satisfied, Not yet, 4% 80% plan to request, 32% 60% Generally Satisfied, 30% 40% 20% Not requested/D 0% on't plan to, Generally Format and level Frequency of Models provided Clarity of LPA 12% Unsatisfied, of detail provided disclosure post-commitment provisions on 15% Very what is reported and how Unsatisfied, 7% Satisfied Mostly Satisfied Mostly Unsatisfied Unsatisfied Source: 2014 ILPA Members Survey on SEC Exams.
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