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Investor Trade Body Eyes Washington Push

The Institutional Limited Partners Association, the body that represents investors in private equity funds, is taking steps to raise its profile in the U.S. capital, as the industry faces scrutiny over transparency.

ILPA has shifted its leadership from Toronto to Washington and is considering registering as a lobby group in the U.S., according to people familiar with the matter.

Executive Director Peter Freire, who took over the leadership from Kathy Jeramaz-Larson in June, is based in ILPA’s Washington office, while Jennifer Choi , managing director of industry affairs, has been based in Washington since she was appointed in 2014.

The group has three employees in Washington and one in Boston. Its Toronto headquarters still has a team of 12.

If it registered as a lobby group, ILPA would be able to secure more meetings on Capitol Hill, according to a person familiar with the matter.

ILPA, which was founded in the 1990s, represents more than 300 organizations globally, including public pension plans, corporate pensions, endowments, foundations, family offices and insurance companies.

Depending on the size of the organization, members pay an annual fee of between $3,000 and $4,000. Another income stream for ILPA is its annual GP Summit, an event which gives private equity fund managers the opportunity to meet a large group of ILPA members. Fund managers typically pay $40,000 each to attend, according to ILPA’s website.

ILPA’s focus has primarily been educating its investor members and wider stakeholders about the private equity industry. In 2009, it established guidelines on best practice for fund documentation to improve the partnership between investors and fund managers.

Private equity firms and investors have increasingly come under the spotlight on issues such as transparency and fees, particularly in the U.S.

In April, the California Public Employees’ Retirement System , the largest U.S. pension fund by assets, came under fire when it admitted it didn’t know exactly how much carried interest it paid to private equity firms.

In Europe, investors are also stepping up efforts on fees disclosure, with both pension funds APG and PGGM recently refining their policy on investments costs.

In July, a group of U.S. states and cities said it planned to send a letter to the Securities and Exchange Commission, asking for greater transparency and more frequent disclosure by private equity funds about the fees and expenses they charge.

As a result of this increased scrutiny of the industry, ILPA has started “to pay more attention to the political side of things,” according to the person.

Some investors have welcomed the idea of having a more visible investor group in Washington D.C.

“Being in Washington lends itself to more regular interaction [with policymakers]–that has got to be helpful,” said Howard Searing, director and portfolio manager in private markets at U.S.-based DuPont Capital Management.

Kevin Campbell , managing director in the private markets group at DuPont Capital Management, agreed that “having an opinion on the Hill is not a bad thing.”

Jorge Huitron, a senior consultant at Aon Hewitt, said: “It would be good to have a more organised lobby group representing LPs [limited partners].”

He added that it has been hard to get a collective investor view on certain industry issues in the past.

“If ILPA becomes a more formalized lobby group, there’s more of an incentive [for investors] to come together,” he said, adding that the external pressure on the private equity industry to improve transparency has partly pushed ILPA into that direction, he said. “It’s part of ILPA’s evolution.”

Source: http://blogs.wsj.com/privateequity/2015/08/24/investor-trade-body-eyes-washington-push/

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