Management and Reporting Anchored in Real-World Data and Thorough Analysis
We provide our clients with high-quality portfolio management and reporting characterized by real-time, robust monitoring of investments and informed by ongoing relationships with the investment managers, in-depth performance reporting and analytics, relevant and current benchmarking, and accurate accounting and validation of cash flows.
We utilize a customized SunGard Investran platform to house all quantitative performance data and we track more than $100 billion of alternative asset commitments across over 2,000 active commitments in more than 1,000 different investments managed by approximately 400 investment managers. These partnerships have vintage years dating back to 1990. Geographically, our clients' investments span the globe and include U.S., European, Asian and emerging markets investments.
LPCA's system provides IRR and multiple calculations that are CFA Institute-compliant. In order to avoid the skew associated with weighted returns, IRR calculation is based on pooled cash flows for the relative category and is based on client-reported and reconciled cash flows coupled with general-partner-reported and reconciled valuations. Additional detail and analysis is possible from our system depending on the needs and analysis requirements of our clients' portfolios.
The system allows our clients to calculate multiple rates of return at the partnership and portfolio company level. We also populate characteristics and financial data on the underlying portfolio company holdings.
LPCA utilizes a number of different external alternative investment benchmarks available in the market. We also utilize publicly available real estate indices such as NAREIT, NCREIF and other REIT indices. Our robust database is also utilized in measuring comparative performance between managers.
In addition to the alternative investment benchmarks, we also perform public market equivalent measurements. We utilize a variety of public indices, including Russell 3000, S&P 500, MSCI Global, MSCI World, Wilshire 2500 and others, to compare private equity returns to public indices, applying risk premiums if necessary. Relative performance can also be calculated by applying the same cash flow dynamics as for any given partnership, resulting in public market equivalents. Further, this functionality is available to our clients through a dynamic online tool.
LPCA also has extensive experience developing benchmarks tailored to each of our clients for use in various analyses. The benchmarks are adjusted to closely reflect the activity and strategy prevalent in our clients' portfolios. Utilizing our database, we have the ability to perform peer group comparisons at both the partnership level, by vintage year, partnership size, strategy and/or geography, and for individual portfolio companies by vintage year, industry and geography.
FUND ACCOUNTING AND OPERATIONS
LPCA has back-office accounting and operational capabilities and control systems that are tailored to support internal processes of our clients. The scope of service varies and depends on the level of outsourcing that a client wants to exercise. We offer various accounting services that support the audit and reconciliation processes of our clients, and have developed control systems to ensure the accuracy of capital draws, distributions and compliance with respect to management fees and carried interest.
CASH FLOW VALIDATION
Limited partnership agreements are complex and subject to interpretation. In "gray" areas of the agreement, the general partner and its legal counsel often make that interpretation, leaving limited partners uncertain about the correct amount of cash to be received or paid on each distribution or capital call.
To address this problem, we provide our clients with a rigorous analysis of various economic arrangements at the beginning of the partnership and during the partnership's life, focused on management fee calculations, partnership expenses / fee allocations, distribution waterfalls, clawbacks and tax distributions. We perform thorough reviews of all capital calls and distribution notices for compliance with the legal agreements.