May 27, 2016
Interviewed by: David Snow
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Strains on the LP Back Office

The ILPA’s Peter Freire describes the contraints of the LP back office and how standardization can help.

The ILPA’s Peter Freire describes the contraints of the LP back office and how standardization can help.

Strains on the LP Back Office
With Peter Freire of the Institutional Limited Partners Association

David Snow, Privcap: As the private equity asset class has grown, the assets under management by many of these LPs, many of them your members, has ballooned. And the administrative burden for a lot of these LPs, some of them under-resources public pensions, for example, has increased. So has the challenge of running an LP, call it a back office, increased among your membership?

Peter Freire, ILPA: You touched upon the issue of under-resourcing, which I think is absolutely an issue. And as assets under management have grown, I don’t think you’ve seen, by and large, the incremental investment that many of our LPs would certainly wish to have seen. So a lot of the work we do around standardization will hopefully alleviate that burden. But it’s not just an issue of manpower resources. There are constraints on compensation and things like that. And in an industry like private equity, where various segments are far better compensated, it creates tensions out there. So attracting and retaining talent is always an issue that our members will face, and be wrestling with.

And so anything we can do in terms of bringing the resources together and create these standards and templates and things, to help them be more efficient, helps alleviate that particular pain. But it is an issue out there. I don’t think it’s going to get solved. I mean, this is an asset class that continues to grow. I think as trustees and investment communities look at the returns, they’re saying, wow, this is the asset class that has done well, we need to increase our allocation. So the work is going up, it’s not going down. But I hope with things like our reporting template, that will, again, alleviate the burden.

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