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Alternative Market Briefing

Other Voices: ILPA Principles 3.0 reflect changes in the alternatives industry

Friday, July 12, 2019

By: David Warburg, Seyfarth Shaw

Overview

ILPA Updates Its Best Practices Guidance in "Principles 3.0." Responding to private equity and other alternative asset investment trends and new issues, the Institutional Limited Partners Association (ILPA) recently released "ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners." ILPA Principles 3.0 updates and expands on prior ILPA Principles 1.0 (2009) and 2.0 (2011).

Noteworthy Highlights from and New Developments in Principles 3.0

While ILPA 3.0 builds on and comprehensively reiterates prior principles last fully enunciated in ILPA 2.0, it addresses several aspects of private equity and other alternative asset investment that are either recent developments, or were not addressed previously. Summarized below are some of these areas that were not previously addressed by ILPA 2.0, along with the primary ILPA 3.0 recommendations.

Co-Investment Allocations. General partners of funds (GPs) should disclose the framework for allocation of co-invest opportunities and how related expenses will be allocated, including any prioritization. Existing side letter co-invest rights should be disclosed. Where co-investment opportunities have been offered any other GP-managed vehicle, the GP should disclose any potential conflicts to the limited partner advisory committee (LPAC).

Fee and Expense Allocation and Reasonableness. Travel r......................

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