Understand the New ILPA Reporting & Performance Templates

Jen Cuello: So much. Here's a very, very quick look at our agenda. We're going to go through a lot of questions that both we at Eisner Amper and Neil and Emily at elpa have received. But before we do that, as promised, we feel like it's very important that you all get your CPE. So we are going to hit you with another polling question. So polling question three, have you started discussions related to implementing the updated ELPA reporting template and the new ELPA performance template? Yes, no or not sure. And I feel like at this point there's no better place to start than setting the stage. So Emily and Neil, I'll turn it over to you to walk us through some key things that general partners, limited partners and service providers like myself should think about now that these templates have been released.

Emily Kisak: Thanks so much, Jen. Before we get started, I do, I just want to thank both you and the team Eisner and for having us today. We're excited to dive into the templates and explore with you all the benefits these templates can provide to the industry. So as you're taking a look and answering this first polling question here, I'll start off by noting that this is a helpful data point for us. We estimate that the older ELPA template, the 2016 version, had about a 50% adoption rate by gps. Now that's a figure that took us years to achieve, but of course when the fee and expense template was first released, it was the first of its kind. The updated reporting template is a bigger and better version of what I'm sure many of you have come to know and love. So we are certainly hoping for higher and quicker adoption of this one.

Now, on that note, I'll note the performance template. It is new. There is no version one of this, but we're hopeful that while work is underway to implement the updated reporting template, that time can also be spent to implement the performance template. Organizations can hopefully take advantage of those economies of scale regarding development work. So I think if we're ready to move on to the polling results, I Okay, got to say I was hoping for a little bit better. More yeses here though, as I just mentioned, I do recognize that at least the performance template, that that is a new template and adoption. It can be challenging. Hopefully the time that we spend diving into these templates will help convince you that they're not so bad and they are worthwhile. So I, let's dive in now and start by taking a look at next steps or things that you should be thinking about now that these templates are available. Most importantly, conversations between LPs and gps need to be had gps. If you've provided the template previously or if you've maybe heard whisperings from your investors that the template is of interest to them, don't be caught unaware. Development implementation work, it can take time as we all know. So we ask that the communication lines between you and your investors are open. And so one side doesn't have an expectation for reporting that's unknown to the other side.

Gps, I mean, if you know that your investors will want this information, now is the time to start talking to your fund admins, IT providers, et cetera, so that way they have ample time to provide you with a solution. And then LPs, if you want this information, start talking to your gps. Don't assume that you'll just receive this information without asking for it, and of course, make sure that you leave your GPS time with ample runway to implement these solutions and implement this new template. And of course, I mean our biggest recommendation is always going to be to push to include the template within LPAs and side letters really institutionalize the need and ability to provide a certain level of fee and expense reporting.

So onto our recommended timeline, we spent the entirety of 2024 developing and redeveloping the templates, and they were released in January of this year. So this year we're spending 2025 creating supplemental materials, resources, getting in front of LPs, gps, all of you through webinars such as this one, to encourage adoption and answer questions. So users of the template should spend this year understand the template, asks those questions, take steps towards implementation, and then next year our guidance that accompanies all the templates that recommends that the templates be ready for use for one Q 2026 reporting. I do however, want to note that our recommendations surrounding the first delivery date and the treatment of older funds, it does differ between the reporting and the performance template. I'll get into that in a minute.

Starting first then with the updated fee and expense reporting template. So that should be provided to LPs for all funds that are still in their investment period or newer. As of Q1 2026 older funds, we're not recommending a switch to the new template. These older funds, it may make more sense to continue to use the 2016 reporting template simply for consistency in reporting over that fund's life. But it does paint us a little bit to think that a fund launching right now might not use the updated reporting template simply because that updated template's not been implemented yet. Hence the reason we have that lookback period, that is why we're recommending funds still in their investment period as of or during Q1 2026 make the switch to the new template. We do have line items built into the updated reporting template to help carry over information from the old to the new for funds that will need to make the switch.

So we're hopeful that at least it will be a fairly painless process. Now, the performance template, we're only recommending that this be used on a go forward basis. So for funds launched during or after Q1 2026, we don't want to ask managers to reclassify historical cash flows or reopen their books to recalculate performance. So we're only going to be looking at this on a go forward basis. So yes, even a fund launching, let's say today, even though the performance template is available on our website, a fund launch today would not need to use this performance template will only be funds raised in Q1 2026 or later. Now, caveat to that, it is also known that funds performance after one quarter of activity, it's going to be pretty meaningless. So we're recommending that the performance template be ready to be used beginning with Q1 2026 reporting, but that it only be used to capture cash flows at that time. So we're recommending that four quarters of activity pass before the template with performance calculations included is distributed to investors. So meaning that if you begin capturing a funds cash flows in Q1 2026 and the template would not need to first be delivered to LPs until Q1 2027. Seems like a long way away. It will be here before you know it though. So please do not delay.

And then of course, as you're going through planning and implementation, I want to highlight we do have resources available on the elpa website. They're available for download and they contain answers to many of the questions we've already received. We have an FAQ document, it is a living document. It's continuously updated, so please check that as you're going through the materials. We do have a summary of changes between the old and updated reporting template. And then for the performance templates, we have sample completed templates, we have transaction type mapping. We also have several one pagers that highlight various aspects of the performance template and they dive into the calculation methodology embedded within those templates.

Jen Cuello: Fantastic, thank you Emily for going through that with us. So there's good news for the majority that mentioned they hadn't started discussions yet. One, you're here, and two, there are significant amount of resources that are available to all stakeholders. So as Emily said, the key point is that while there's some time before these need to be adopted, laying the groundwork now is critical for a smooth process. So moving on, what were the most important drivers for this initiative, and can you also tell us what drove the timing behind the release of the new templates? If you could just give us a little bit of background here.

Neal Prunier: Thanks so much Jen. Really appreciate the opportunity and thrilled to be jumping in on this session with the audience here. We will certainly get into some of the finer points and details of the templates itself, but the vast majority of the questions that we've been receiving have been about some of the background and the process and the context. So we did want to spend some time upfront on this. So I want to highlight some of these key points. I started at OPA back in 2019, and one of the first projects we actually contemplated back then was an updated version of the reporting template, which at that point was about three years old. And even back in 2019, we knew there were line items relative to subscription lines of credit that were needed. We decided not to pick that up at that time. And then a few years later, the private fund advisors rule from the SEC came out, and the element of that rule was related to quarterly statements, which required updated reporting related to performance and cash flows as well as fee expenses.

So we saw that as a tremendous opportunity to pick up the efforts on this project to be able to update the reporting template as well as create a new performance template. This was always felt as being the next natural evolution of the IPA reporting standards, updating something that had been out in the industry almost 10 years at this point and introducing for the first time a performance template. And we also felt that leading this effort in connection with the rules for the private fund advisor was an opportunity to showcase that the industry can work together to find meaningful solutions towards implementing these new standards and requirements. We anticipated though, from day one that the rule was potentially and more than likely to get vacated. So we also identified from day one with our working group, with our steerco, with our satellite groups, that even if the rule was vacated, we were going to continue to push forward because of how important these data points are to LPs on the right hand of your screen, do have some data there that highlights just how much LPs feel there is a need for stronger transparency related to fee expense and performance, as well as how much LPs view this as a must have when negotiating to receive the I LPA templates.

Emily mentioned this before, the idea of putting this in LPAs and side letters, we have data that suggests that this is found in side letters, language related to providing these templates and under 10% of funds, we would love to see that number go up. So it's not something that each LP needs to negotiate for individually as part of their side letter agreement and really want this to be something that the industry can help push forward. I mentioned that we had started on this effort and then the rule was vacated. We had actually three days prior to the rule being vacated, gone out to our first comment, which lasted three days, and we pulled it back once the rule was vacated. This was an opportunity for us to take a look at what we had developed during the first several months of the effort and reevaluate to be able to identify where were there areas where it was a part of that comment template only because it was a requirement under the SEC rules and not necessarily something that was a primary driver for LPs or gps.

So we took a look at past comment letters, past meeting notes, we identified all the different structural questions in line by line item data points that we wanted to address, and then we put together updated templates and ran a whole nother comment period later on. Having made some of those adjustments again with the idea of reorienting the templates towards some of the most important elements for the industry and addressing some of the most pressing structural and line item specific questions. One of the other biggest changes that I want to highlight as we look at this next slide is the additional time for implementation. So back to that first polling question, 30% or so have already started those discussions. That's great. For the others who haven't, there's still time and want to highlight that the implementation window from January of 2025 towards the first delivery in, let's call it mid May, 2026 is about 15 months.

And so we know that's a longer time period, and that's something that we did purposefully, and that's only beneficial if folks take advantage of it by starting these conversations early with your LPs, with your gps, with your service providers to be able to do the necessary work to get this set up to deliver, we recognize that there will need to be some reviews of general ledgers and chart of accounts for GPS in conjunction with their fund administrators and LPs will have to adjust the way that they ingest this information and analyze it across all their funds. But we do really feel that these are worthwhile and meaningful developments to take to be able to achieve the better results through these templates. So as we think about it, Emily walked through the updated implementation timeline that we are providing, and you can see that up top this represents one of the biggest changes that we made from a structural item standpoint when we moved away from the requirements of the private fund advisors rule. We were originally intending in completing these templates in August of last year, and they were going to need to be delivered about a month from now actually, because at the 45 day limit, yeah, about a month from now. And so there was going to be about an eight month or so timeline for implementation. We really wanted to reorient this and give everybody over 12 months with implementation to start the conversations to raise awareness. Do really want to encourage you if you haven't started yet, to start the process now.

Jen Cuello: Thank you, Neil. And I think I'm going to give you full credit for this. I heard you say in another webinar that not only was the new reporting template really timely because of what was going on with the private funds rules and even though they were vacated, but you also gave some really interesting comments about how much has changed since 2016. And as a football fan myself, one of the stats that I thought was very interesting was when the last reporting template came out in January of 2016, Patrick Mahomes was still playing at Texas Tech. So that actually very much resonated with me about how much time has passed since the last template was released.

Neal Prunier: If you think about the industry mean, think about the world, how much has changed since 2016? Nobody knew what covid was. I mean, yeah,

Jen Cuello: A hundred percent. A hundred percent. And just building off that previous question, can you tell us just about the process to update the reporting template and create the performance template?

Neal Prunier: Sure. So from the beginning of this presentation, we are the Institutional Limited Partners Association. We work most closely with our LPs and LPs are our members. However, anytime we put something out like these templates, we really want it to be a collaborative experience and a collaborative engagement across the industry. If we put something out and nobody wants to adopt it, well we did all that work and it's not going to have any meaningful impact. So for this effort, and I used some of these buzzwords before, we had two different working groups comprised of LPs, gps and service providers, one focusing on the reporting template and one focused on the performance template. Those groups met weekly for about nine months to really push this forward and make sure we were getting a lot of feedback, getting a lot of data, getting a lot of perspective as we took this process forward.

We also had a steering committee that sat on top of that comprised of the same types of groups. So between the steering committee and working groups, we had roughly 45 organizations involved. You can see some of the names on the right there. We also had satellite groups that we engaged with on a monthly basis through different meetings and email updates. We had over 500 organizations by the end of this connected to our satellite group. We held our most recent meeting back in March with this group, and we anticipate continuing to hold meetings with this group on a go forward basis as well. We also, as mentioned, held another comment period once we had the updated post private fund advisors rule template where we received over a hundred submissions. And throughout all this, we had tremendous support by our project management firm, cross Country Consulting. So want to just highlight that this really was designed to be an extremely transparent collaborative process designed to engage with a wide process section of the industry. I highlighted LPs, gps and service providers. We also really tried delicately to work with a variety of size gps, geography, gps and LPs to make sure that this wasn't just going to be something that worked for Mega Cap US funds. We wanted it to be something that worked for emerging managers based out of the EU and really think based off of the representation that we had and the efforts that we were able to engage with a real meaningful section of the industry.

Jen Cuello: Yeah, just a really impressive collaborative feat involving stakeholders from all sides of the industry with really high engagement. So it's amazing what you guys were able to put together. So now that we know how we got here, if you could go into a little bit more of the details and I guess starting with, can you compare the structural elements of the reporting template to the performance template for us?

Emily Kisak: Sure, I'll take that. Yeah, I mean we will following this dive into the templates themselves in more detail. But first a quick comparison and to address one of the questions we've actually just received into the q and a, starting at the top, the focus of these templates, both of these templates are going to be suited. They're going to be best suited for your more traditional closed-ended PE type funds. Now, I mean we have seen all sorts of funds adapt the template to their specific needs, but first and foremost, the template was designed with the closed-end traditional PE funds in mind.

The next thing I want to touch on is I'm actually going to quickly revisit implementation again, and it also is this second line item here in the table. And it's a point that was debated throughout the development of the templates and throughout the comment period, and it was, do we make exceptions or perhaps different implementation timelines for emerging or mid-market managers. Now, the argument in favor of simplifying the template or extending the implementation window for either of these templates, it was well newer or smaller managers, they don't necessarily have the resources available to implement or provide the templates by the one Q 2026 implementation deadline. The counter argument and the way we ultimately went was when investors commit to a fund, they have certain expectations regarding the ability of that fund to not only deploy capital and add value in that way, but they also have expectations regarding the back office capabilities of the manager. There is a certain expectation for managers who are serving institutional LPs to be able to track and report on fees and expenses regardless of the manager's size or relative newness. So a manager that sits back and says, well, we can't provide this reporting without taking away energy from diligence and investment processes. Many investors consider that to be a red flag. So for this considerations across gps, we opted to keep the requirements the same across developed fund and new fund and emerging fund, what have you.

Moving on down this table, the level of reporting periodicity, frequency of reporting, these are all pretty straightforward and they're detailed in the guidance that accompanies both templates. The level of reporting is unchanged for the reporting template from the 2016 version, the performance template, and that is meant to specifically report on the cumulative fee paying investors allocation. Now, what do we mean by fee paying investors? Generally, this is going to refer to limited partners who are actively paying a management fee or carried interest. It could be either the full or the reduced amount to the GP for investment services. Now, for the performance template here, managers have the ability to modify this definition, exceptions areas for modification, optionality, what have you. They're all outlined in our guidance, but at least this template, I really want to highlight that this is the performance template is going to be more of a total LP template. It's not intended for individual investor reporting. So we've touched on the implementation date look back period and delivery, timing of delivery after quarter end. I want to touch on this one as well.

When the private fund advisors rule first came to be, I think the requirement was detailed fee and expense reporting, probably I think it was due about 45 days after quarter end. That's a quick turnaround. So once that rule was vacated, we reviewed back with the working groups and the satellite groups what would be more doable. And so we've settled on this recommendation 60 days after quarter end for direct funds, 120 days after quarter end for fund of funds. We do make a note to say that this is strictly a recommendation. We ultimately defer to the agreed upon governing docs of the fund, those in any other sort of regulatory requirements. And that brings me to the last row in this table, the connection to the LPA or other governing docs, it extends beyond the timeline for reporting. So on the reporting template, this might also include the definition of related persons, which we do not define or the consolidation of the fund in its parallel vehicles, locker entities, et cetera. In the template on the performance template, this may include the definition of a fee paying investor consolidation as well, et cetera.

Jen Cuello: Emily, and one thing I noticed on that slide that we as auditors also appreciate is that you are very mindful of ensuring consistency to accounting standards like GAP and IFRS. Obviously we don't want limited partners seeing one thing on the audited financial statements and then just something completely different in the ELPA template since the ELPA template itself is an audit. And to my understanding, and I'm sure we'll get into this when we get into the details, the template's going to give more detail where the audits might show a broad view, but very important, and we really appreciate that in your discussions that we were really stressing the importance of it not being inconsistent. So before we dive into the templates themselves, which I know everybody is very excited about big flashing lights, we have a polling question coming, so make sure that you're getting your CPE.

And the poll says, do you plan on for our general partners providing requesting limited partners the reporting template as part of your standard quarterly reporting package for eligible funds? Yes. No, we're not sure. And just as people are responding to that question, we can get started on the next topic, which is obviously one of the biggest questions is what are the key changes to the reporting template from the previous version? And I'd also love to hear how you both feel. It helps enhance transparency or further enhance transparency between general partners and limited partners, which I know has always been a goal and objective of the template.

Neal Prunier: Yeah, thanks so much, Jen. So as we think about the changes, and I'm going to jump ahead, well, I guess we'll go ahead and look at the polling results. Sorry, I did that on my own. So again, 30% that is consistent with what we had seen before, and that's not totally surprising to see. It's aligned with what we had highlighted previously on the session to the first polling question. And so we do expect to see this number come up and we recognize that it took us roughly eight years to get to 50% of the market with the first fund. So we are actively working to provide even more support to get the adoption to an even higher clip. But as we think about the reporting template itself, to highlight some of the areas that haven't changed, I actually am going to share my screen momentarily just to walk through this at a high level to help make sure that this is crystal clear.

So if you are familiar with the reporting template, a number of these items and the layout of our new reporting template should look very consistent. We are capturing the values across the LPs allocation, the total fund and the GP allocation, as well as quarter to date, year to date and inception to date, and doing a ally structured and detailed version of the pcap going from beginning nav down to ending nav. So there are a lot of similarities from a structural standpoint with what you would be accustomed to from the previous reporting template. However, as we think about some of the changes to the reporting template, there's a number of areas where we've added more details such as to the cash and non-cash flows, as well as then to the internal chargebacks and external partnership expenses. We're going to be diving into these in a little bit more detail in the next couple slides as well as shifting to a single uniform level of detail in the presentation, rather than having the ability to provide more of a rolled up level and a more granular level, we now are requesting this just in one consistent granular structure while also to the points before leveraging the existing accounting standard.

The idea of this is that it should line up with the financial statements, albeit being more detailed in many cases, but the work that goes in between GPS and their auditor to decide how to do the reporting for the purposes of financial statements that should now carry through over to this template. Whereas in the 2016 version, we did have some unique IPA definitions and OPA requests that would have potentially made it differ than some of the figures being presented on the traditional financial statements. So I'm going to walk through some of the changes that I've referenced before. I am going to share my screen once again because I want to make you aware of some of the additional materials that we have. If the number one biggest question that we've received has been about the process and context and the whys by far, the number two most frequently asked question has been about what's changed relative to the 2016 template.

So to help provide support towards this question, we've put together this material called the IPA reporting template, some supplemental guidance changes overview that provides an overview of all the changes, and this is available on our website for you to download. And we have this presented in a few different fashions. So for example, we have the updated reporting template in a detailed fashion where it walks through how the new rows are relative to the 2016 template. So one of the sections we're just about to jump into in the slides, you can see where there are new line items and what they were previously or most closely connected to in the previous reporting template. We've got the legend up here to help you understand what the different colors mean and what the different labels mean so that you can see what's new, what's modified or moved and how things have been mapped over.

We also then have a simple version of this that just indicates whether it's been moved or modified or whether it's new. And then to help those that are more familiar, perhaps with the 2016 reporting template, we present it in this layout and then indicate how it's moved relative to the updated IPA reporting template. So you can see for one of the next sections we're going to talk about with the external partnership expenses, you can see how it's been split out, and this one line item is now broken out across multiple line items in our template. So do really want to encourage you to take a look at this set of materials to help understand all the changes. Another piece of guidance that we've put together is a formula breakout just to help you understand in the new reporting template, all the different formulas and how the different fields are connected to each other.

So we have this in a simple manner as well as a more detailed manner that shows all then the sub calculations that are connected as well as a text manner to help you see the different rows that are then connected. So we do hope that these sets of materials will be very helpful. Emily referenced this before, but I do want to highlight that table of all the expectations and the different ways to deliver this and different considerations. That is all included in our suggested guidance. We have one version for our reporting template and one version for each of the versions of the performance template that Emily will get to momentarily. So with that, did want to provide some commentary on some of the biggest areas that we've adjusted. So number one is this internal chargeback sections, the idea of expenses allocated or paid to the investment advisor or related persons.

This did not exist on the previous template as a standalone section. They were in essence coupled in with other line items, but mentioned not only has things changed for Pat Mahomes at Texas Tech in the last almost 10 years, a lot has changed in the industry as far as the amount of expenses that are getting passed on to the partnership, including work being done by the GP directly or through their related persons. So this is something that LPs have a keen interest in getting more insight into. So what we've done is added a new section that's relevant for these internal chargebacks, and we've broken it out by what is more department activities, if you can think about it like that. So all in one row is administration, accounting, valuation, audit, and tax prep advisory. For example, when we did our second comment period, we had actually had all of these broken out as single line items and we heard a resounding amount of feedback from the GPS that this would actually require them to fundamentally change the way that they capture time codes in their system.

And that typically a member of the back office team is indicating the amount of time that they're spending working on a particular fund, but not necessarily differentiating between activities like accounting versus audit versus tax prep. So we took that feedback into consideration and adjusted the way that we presented this information to be able to make it still meaningful to LPs to get this critical insight into these internal activities, while also making it easier for gps to provide without having it require a complete overhaul of the time tracking system within the GPU organizations. Next up is the external partnership expenses. So as you can see, looking at the list from the left to the right, we have gotten much more granular with the breakouts. So not only are some of these items, you're pulling out the internal chargeback amounts, but rather than grouping some of these points together, we have now separated them out into specific line items so that there can be transparency.

One of the biggest reasons we did this was we captured from the gps that we were working with as part of this group through our working group as well as satellite group, their traditional quarterly reporting, and the vast majority of them were providing, especially in this top section, all these line items as singularly broken out line items, differentiating between valuations versus fund admin and accounting versus legal, regulatory and compliance versus audit. So we wanted to make this step moving forward. There's a question that I'll talk about at a high level here related to the reporting template on subscription facilities. We do have additional materials, especially on the performance side of things, mapping out the mechanics of the with and without. Emily will talk about that at a high level, but do want to assure you, we have in-depth breakouts of how to do those calculations on our website through the various materials we have available.

But we have added a number of different line items here to provide greater insight for LPs into subscription facilities, looking at particularly the fees, and then another line item for the interest. And then we have additional line items for other credit facility, excuse me, other credit facilities fees and interest. It was really important for our LPs to be able to isolate out the subscription facilities. What we've heard from a number of LPs is that on a quarterly basis, with interest rates being what they are right now, your single largest quarterly expense can be the interest on the subline rather than let's say the management fee. So it's really important for LPs to be able to get this insight and isolate out subscription facilities across the fees and interests and then have additional light on for other credit facilities such as NAV based facilities. Not to overcomplicate it, you would only provide the reporting on these if it is at the level of the fund from a consolidation standpoint, based off of how you define what a fund is and not at a lower level vehicle.

We also have guides that walk through this type of detail as well. So next up, I mentioned up at the top the idea of level one, level two, where we had more rolled off reporting versus more granular reporting in the 2016 version. We've eliminated that to be able to provide even more consistent data at a more granular level for LPs so that they can make even better decisions and have even better monitoring across all their funds in their portfolio. Finally, they just want to highlight a couple of these areas. These slides will be available for you where you can take a look at this to get a better sense of all the key changes and the materials that I before are also available on our website.

Jen Cuello: Thank you, Neil. Very much appreciate that. We were able to actually get the live view from you there. So thank you for sharing your screen and walking us through that. And I also know that the changes from the previous template, as you mentioned, have been a really important topic for everybody. Before we get into the performance template in more detail, spoiler alert, we do have a polling question that it's very important that you answer to get your CPE. So the question up now is do our general partners in the audience plan on providing requesting limited partners the performance template as part of your standard reporting package for eligible funds? Yes. No or not sure. And as everybody's answering this, I actually had a question, and it's also related to a question in our q and a. So for Neil and Emily, our previous polling question asked if general partners would be providing the reporting template. This one's asking about the performance template. Do you think there will be instances where general partners will provide one and not the other? And how common do you think that would be, if at all?

Emily Kisak: Yeah, I mean, I'm happy to take that. I mean, our hope is that everyone provides both of the templates. That would be the ideal scenario for sure. But it kind of goes back to what I was saying in the beginning where we have a version one of this reporting template and people have become familiar with it, and people have figured out how to implement that and include it within their standard quarterly reporting. It's much easier to simply update the template and go through the IT and development work needed to do that. The performance template, it's brand new. Granted, we hope that over time that adoption rates increase and match those of the reporting template, but we do understand that it can take longer and we don't want to discourage anyone If for the time being you only have the resources to implement one, focus on that one and then get to the second one. We don't want to say it has to be all or nothing. That would be, it's not really helpful for anyone in the end.

But lemme talk I guess a little bit about the performance template because we created it because we do feel that it is a meaningful step forward in performance measurement, standardization. The templates, they detail the inputs to the performance metric calculations. They're going to be things like the underlying fund level transactions and cash flows, and it's going to allow LPs to isolate the drivers of performance and templates. Also going to create a standardized calculation methodology for the IRR and M, both with and without the impact of fund level subscription facilities. And so that's going to enable LPs to more accurately compare GPS across their own portfolios. So lemme take a look at this polling result heavily on the not sure side of things. Glad to see that there's been at least some interest in again providing this information. It really can only be beneficial. I think the information captured in the templates, it gives LPs those building blocks to recalculate performance. So having that cashflow information, LPs can now dive into the impacts of things like fees, expenses, sublines, without having to reach out to their gps. So once you get past that implementation hurdle, it can really be a time saver for a lot of people. We really do encourage you to consider adoption and work towards adoption.

So getting started then with the granular performance template, as we do have two versions of the performance template available for use, we have two because during our comment period, we received a bit of feedback that we were trying to kind of pigeonhole folks into calculating performance metrics one specific way. And it was a way that had required managers to itemize their capital calls or call capital on a granular basis. What that means is managers would've had to know at the time of the capital call what the end use of that capital was for. Is it going to be for management fees to finance an investment, pay expenses, et cetera. That solution, it doesn't work for everyone. So we did go back to the drawing board and we developed a second template. I will dive into both the details and the differences as we go through.

So here, this is what you'll see. If you were to open up the granular performance template, you'll be greet with a table. It looks like this. This is the cashflow table, and it provides a place for GPS to capture transaction data. It's going to include the dates, not the notice date, but the due date. It's the dates, the amounts and the transaction types. Transaction types will be available in a dropdown menu there in the third column. And again, it's going to be for the cumulative fee paying investor group, the four rightmost columns here, they'll auto-populate based off of a series of mapping rules that are going to be associated with the transaction types selected in that third column. Now before turning to those mapping rules, I want to emphasize that these are all going to be fund level transaction descriptions. So it's only going to be focused on transactions that occur between the fund and its investors.

That's what's going to be captured in this cashflow table. Any sort of portfolio or investment level transactions, they're outside the scope of this particular table. I'm highlighting that it's especially relevant as I look at these gross columns that are kind of gray out here. Organizations, they do think about gross performance differently. Some organizations base their calculation on the fund to investor cashflow stream captured in this table. Others are going to base their gross calculation on the fund to investment cashflow stream. So for the former group, these gross columns, they're going to be absolutely essential to calculating that, what I'm going to call fund level gross. But again, recognizing that not everyone thinks of gross performance this way. These columns are optional. So for the folks who base their gross calculation on the fund to investment cashflow stream, these columns are still going to auto-populate, but they can be blacked out.

So moving over to mapping here we see the rules for the granular methodology. If I look at the top row here, capital call for investments, you select this transaction type in the cashflow table dropdown, the gross, the net, the width, and without All four of those columns are going to auto-populate according to the rules that are shown here. So a call for investments, it's going to be included across the board. It's going to be in the gross, the net, the width without a call for management fees is only going to be included in the net calculations. And so what this does is it allows a fund level gross to be calculated using values that are most similar to the investment level cash flows. So we can exclude fees and expenses from the fund level gross. We're able to run the IRR calculations on calls and drawdowns that are specifically intended for investment. So that's going to be the defining feature of this granular methodology. It's that GPS you can go through, you can itemize the capital calls and drawdowns, but again, in order to use this template, GPS are going to have to know at the time of the call the purpose for that call.

And then also included in the template are going to be the actual performance tables. So the fund performance table here at the top, that's going to provide investors with since inception performance, again, based on cash flows between the fund to investors as noted in the table heading. So we have the gross IRR and MIP both with and without the impact of fund level subscription facilities, as I mentioned, those are optional. And then we have the net IRR and TVPI, again, both with and without the impact of fund level subscription facilities. Below that, we include the gross portfolio performance table. That's going to include fields for gross performance. Now based on the cashflow stream between the fund and the investments. So it's going to include fields for realized performance, unrealized performance, total performance. All of these are going to be required metrics, but they're going to have to be manually added into the table.

They're not going to auto calculate based on the cashflow table inputs. Remember the cashflow table is based solely on the fund to investor cashflow stream. And then the third table below, that's the net portfolio performance table. Again, these values here are going to need to be input by the manager and should really only be done so when the template is used for the purposes of marketing or advertising. And that hearkens back to the S SEC's marketing role, which is going to require that gross performance metrics when they're included in advertising or marketing materials, they have to be accompanied by net performance metrics calculated over the same time period and using the same type of return methodology. So in this case, based on the fund two investment cashflow stream, using the gross fund to investment and only presenting the net fund to investor, that would be considered a violation of the marketing rule.

All right, moving on, I'm going to take a look now at the solution that we developed for managers who don't itemize their capital calls. And we've created this decision tree to help. This decision tree is available on the elpa website. It's available for download. So please do take a look at it as you're making your decisions. This tree is going to be based on two decision points. The first is actually going to be how do you calculate gross performance? Is it based on that fund level cashflow stream or is it based on the portfolio level cashflow stream? And that's going to be an important question because if you think about the nature of this granular methodology, the gps who calculate gross fund level performance need to be able to exclude those fees and expenses from their gross calculation. So that way you can only use the call for investments, the drawdown for investments, you can get pretty close to a portfolio level gross that way.

Now, if you don't calculate gross performance using the fund level cashflow stream, there's really not any need for that level of detail. The net fund performance metrics, they're going to be calculated exactly the same regardless of the methodology you use. So adding in that granularity to calculate a gross fund level number probably won't be necessary for folks that don't use that performance metric and the granularity that could just then be an unnecessary burden for gps. So then the second question, second decision point, it's going to be relevant only for managers who do calculate that fund level gross. And it's simply, do you itemize your capital calls? If you do, then use the granular template. If you do not, then we have the gross up template for you.

So lemme take a look. Now at the gross up template similar to the granular template, you're going to open up the gross up template to the cashflow table. There's going to be more similarities than differences here. So we're going to have the same fields to capture dates, amounts, transaction types, same definition of fee paying LPs, same concept whereby the gross, the net, the width without columns, they'll auto-populate based off of a set of embedded mapping rules. We'll say that the mapping rules though they look very different. A gross up methodology here, it does not itemize capital calls or subscription facility drawdowns. Instead, you'll see we have total call and drawdown amounts. They're going to be recorded and treated as paid in capital across both the net and gross IRRs regardless of the use case. Now, because the gross up methodology captures management fees and partnership expenses in the gross cashflow stream, we do need transactions to then capture the actual payment of these fees and expenses. So that's going to be these gross up line items that you see towards the bottom of the table.

So grossing up fees and expenses, what that will do is it will add paid fee and expense values back into the cashflow stream as outflows. So for the purposes of the gross fund level IRR calculation, an outflow like this will effectively cancel out any amount paid in for fees or expenses. It's a way to kind of algebraically remove the impact of fees and expenses from the gross fund level calculation. And then for the purposes of the gross multiple, the outflow is added to the multiple as it is going to be included in the numerator. So again, that will algebraically cancel out the fees and expenses that are captured in the denominator as part of the paid in capital. So if you're comparing the two methodologies side by side, you will end up with different fund level gross IRRs under the granular methodology where fees are expenses, where they're excluded entirely, that's going to give you a number that's closer to the true investment level gross figure using the gross set methodology. It is going to give you a slightly lower gross fund level IRR, but it's also going to give you a smaller gross to net spread as a result. And then as I mentioned, even though you will see a difference between the gross results, there's not going to be any difference between the net calculations. You're going to return the same net figures regardless of the methodology that you used.

And then finally you will see the same presentation of the performance metrics as in the granular template. The fund level metrics here, they will auto calculate and the portfolio level metrics will not.

Jen Cuello: Thanks so much, Emily. So this is now a question that's based on everything that Emily just said that kind of defines the two versions of these templates. Are you our gps able to historically break out, or are you our LPs able to digest capital calls into their components on a call by call basis? Yes. No, not right now. Vote for future funds. Yes or not sure. So as everybody kind of works through that, I would just kind of add as it relates to this question and kind of the two different iterations of the template, which I think is very important. We do see certain funds we work with, to your point that just have a lump sum capital call file for every call. That doesn't really break everything out. There are implications obviously for performance as Emily has kind of talked through. There's also implications from an auditor view on the audit side. So just making sure that we can get comfortable that everything is being allocated appropriately and that we understand all the mechanics of the GP commitment, how it'll get funded, and then how does the LPA kind of talk to us about how capital calls are able to be done. So while I know we're really focused here on performance metrics, I also kind of wanted to underpin really the importance of breaking out capital calls and understanding at least the mechanics and LPA requirements even as it relates to something like an annual audit.

I will move on to the results. Okay. Emily, your reaction to the results?

Emily Kisak: Yeah, I mean we have received pretty mixed feedback on this line item in particular. I mean, this is why we've come out with two separate templates to begin with. Folks have different preferred methodologies. Really, it's a helpful data point for us to have. So appreciate you guys filling out the template.

Jen Cuello :

Yeah, great. Thanks. And our next topic is adoption efforts. And while you go through, I'm also just curious as to what you think the biggest hurdle or challenge is to adoption of the templates.

Neal Prunier: Sure. And I think at the highest level, it's going to be first and foremost awareness. So hopefully everybody on this webcast has broken through that. We're trying to do everything that we can to make the industry aware of our work here as well as then give everybody what they need from there, the support to work on the implementation to accommodate that. Highlight it on the screen here. Some of the materials we had available at release day on day one, as well as some of the items that we've released since then. I would highlight that we did a webcast in February that went even further into some of the background and context as well as a February and March on the ilpa platform that's available to everybody in the industry. That goes even to deeper into some of the points here. We're actually finalizing some other materials to release in the next few days.

So check out the IPA website. We're going to continue to put new materials out there, make sure you're on our mailing list because we're going to continue to do webcasts that are open to the full industry to try to increase awareness and then increasingly get into more mechanics and details. Just want to highlight that more webcasts on the IBA platform. And we're constantly exploring other opportunities to get out in front of folks at different conferences and through different channels like this. So we look forward to hopefully seeing a number of you through a number of different mediums over the next several months. And then we are going to be releasing our first set of endorsers here in the next several days. So if you check out the IPA website, you can identify what it takes to be an endorser as well as submit your request to be an endorser. But we do recognize that a lot of the awareness is going to come from LPs adopting this and endorsing this. So we do want to make sure that we can prioritize that as well as get even more GPS on board as endorsers and continue to build out our list of service providers as endorsers. But that's it from our side.

Jen Cuello: Great. And we are at time. So for questions, our team is going to export any questions already in the q and a, and Emily and Neil have graciously offered to reach out to answer some of those contact information is on the screen. I just wanted to thank everyone so much for joining us, and a huge thank you to Emily and Neil for sharing your process, your insights, and really valuable next steps and just things to think about for the industry at large. Also, wanted to give a big thank you to our incredible marketing team at Eisner, er, Astrid, Tina, Lauren and Michelle for everything done to make this happen. And with that, thank you everyone, and I'll send this back to Astrid.

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