GLOBAL - Private equity investors like pension funds can expect the cost of their investments to increase as they require their managers to provide supplementary and timelier information, said KPMG partner Anthony Cecil.
Speaking at the European Alternative Investments Valuation Conference organised by Duff & Phelps, Cecil - who leads the audit team in KPMG's private equity group - said he could not see the private equity managers being so "magnanimous" as to take that cost.
He said: "If producing this information becomes a cost for GPs (general partners) which decreases their margin, it will be passed on to LPs (limited partners).
"I think the 2 (% management fee) -20 (% performance fee) model will somehow start to go up."
He added it would work in the same way as in other industries, such as manufacturing, where additional production costs are eventually charged to final customers.
However, the GPs who spoke at the same panel disagreed. Cinven partner Alexandra Hess said that if a cost applied to the whole LP base, then it should be born by the GP. She said: "It is GPs' responsibility to improve their responsiveness to the requests of LPs."
Permira Advisers director of communication Chris Davison added it would be "peculiar" to charge clients for this cost.
Industry figures speaking in a different panel pointed out LPs were requiring increasing volumes of information from their GPs following the market turmoil of 2007 and 2008.
Scottish widows Investment Partnership investment director, private equity William Gilmore warned there is "trade-off" between the quality of information and its timeliness.
He said: "LPs are asking for better information and want to receive it more quickly. On the other hand, GPs have to decide whether they can provide it."
Standard Life Capital Partners chief investment officer Peter McKellar added that the frequency with which the information is provided was another issue GPs need to deal with. He said: "Good managers out there can give you good information quickly and more frequently, but a lot can be done to improve this in the market."
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