The Institutional Limited Partners Association (ILPA) recently
released the latest version of its principles, ILPA Principles 3.0.
The updated principles provide a detailed selection of best
practices for participants in the private funds industry, and are
informed generally by guidelines of transparency, good governance
and the alignment of interests among partners.
When the private equity investment model was first introduced in
the early 1990s, it represented a significant improvement for
investors over the model for publicly traded investments or mutual
funds. The interests of managers and investors were better aligned
through the requirement for managers to invest alongside the
investors, to be paid a fee which covered operating costs and only
to profit out of performance after investors had received a target
return. There is concern that over time, this alignment has been
gradually eroded. Management fees from multiple funds became a
source of profit, and that
