The Exchanges

Q And so then you come back over to the States, and what was the path from there?

A I came back again thinking that it might be time to think about heading back to school, so I hadn't completely given up on that just yet, but probably had picked up a little bit along the way during those eight years in Asia. But as was the case with Cambridge over my nearly 20 years, another, another incredible opportunity sort of presented itself, and so we created co-directors of our consulting practice, and I was asked to To step into that role along with a colleague from Boston, did that for a couple of years, and then ended up becoming the Chief Operating Officer of Cambridge, and that was a position I had held at the time of making the move to ILPA.

AI assessment note: “we created co-directors of our consulting practice... then ended up becoming the Chief Operating Officer”

Q Well, great. Why don't you give an overview of what ILPA is and the activities that you pursue?

A ILPA today is an organization that is dedicated exclusively to limited partners in private markets around the globe and has been for many years, but has grown pretty dramatically, you know, partly in reflection of the expansion of the asset class, but I think more than anything else is the good work. Of the organization over these years. So we support over 550 limited partner organizations that represents over 5500 investment professionals, and that's front office professionals, legal and compliance operations. It really is the whole of the organization. And they're located in 50 countries around the globe, so it's, it's diversified from just about every angle you'd want to analyze it from size, location, type, nature, program, et cetera.

AI assessment note: “ILPA today is an organization that is dedicated exclusively to limited partners in private markets”

Q Well, why don't we start with your background and your path to ILPA?

A Sure. Yeah. Happy to provide a little color on that. So I was lucky enough to find Cambridge Associates just after finishing school with Boston College and really didn't know, you know, what I wanted to do or where I wanted to be, but it seemed like a terrific organization focused on the right things. And so I joined their DC office at the time, spent a couple of years there, was thinking about going back to get my MBA, had always been the plan, and was afforded this amazing opportunity to help do a little bit of the business planning work for an Asia-Pacific presence. Had absolutely no experience, really had no business being involved in that work, but was paired with one of the managing directors at the time. Spent a couple of weeks in Asia and thought, wow, this would be an amazing opportunity. Had no expectations, but a series of happy circumstances allowed me to move over to Singapore in early, 2001 to help set up the office there.

AI assessment note: “I was lucky enough to find Cambridge Associates just after finishing school”

Q I'm curious how that typically gets packaged in that you started off by saying effectively every pool of capital, every LP is, has some uniqueness in their own way. And so if you're trying to collectively speak for this humongous group of LPs that command so much capital behind them, what's the output that you try to deliver that can serve such a wide constituency?

A Last year, we published the third version of our principles document, which is really the foundation for just about everything that we do in some form. And so that really speaks to three things on an industry-wide basis. Governance, transparency, and alignment of interest. And the hope is that That principles document, those guidelines, so to speak, for the industry are then something that we can collectively put into action. And it's not meant to be a straitjacket for an organization or relationship, but rather a starting point for a more collaborative, strong, long-term partnership for LPs and GPs. So that principles document is really important to us and in many ways sits at the heart of, of all our efforts. That's one example. The standards and best practices work that we do is core to the mission of ILPA, and there, that takes a variety of forms, but I think some of the things that the industry is most familiar with are the tools and templates that, that we produce, whether it's a routine GP reporting or capital all notices, our due diligence questionnaire, those types of things which can be leveraged in their current form by just about any institution, but can also be modified To some extent, depending on unique needs. We hope those are more than a starting point for some of those common tasks, and in some cases can be employed in their current form. One other sort of ave…

AI assessment note: “tools and templates that, that we produce, whether it's a routine GP reporting”

Q How do you find that, again, before the last month, because the world certainly changed, In an environment where the relative power seems to be in the hands of the GPs, there's so much demand, particularly for established performing funds. How do your members embrace the notion of best practices if they're not seeing that on the GP side with the need and desire for them to commit capital?

A Yeah, it's a difficult one. I think that's the first thing to say, and that, that imbalance does exist. I mean, I think for, for a number of years now, the playing field has been tilted for a whole host of reasons, and it's been difficult for LPs in terms of terms negotiations, frankly, in some of the core aspects of the LP-GP relation. Many LPs have taken is to be targeted in terms of what they care about and really go to their GPs with as strong a message as possible on fiduciary duty or reporting or LPAC rights and try and make sure that what they're asking for is what they see as being most impactful in the current environment and not losing sight of the broader range of issues that are worth spending time on over time. But being realistic, frankly, about what's achievable.

AI assessment note: “Many LPs have taken is to be targeted in terms of what they care about”

Q Once they settle into a relatively productive work environment, how are they going about thinking through the private equity landscape?

A I think there it starts, and it's not dissimilar from the global financial crisis, hopefully lessons learned and lessons being applied now, but viewing the private equity program, not in isolation. But as part of the entire investment portfolio, and so making sure that across teams, across asset classes, there's a robust conversation going on in terms of risk management, possible actions to be taken, things that could crop up that would be relevant for multiple areas within the investment program. So that coordination across teams is really critical. Specific to the PE program, as you'd expect, most are trying to get a handle on what that next Of quarterly marks might look like and what that means for target allocations, allowable bands, and thinking about at the macro level, where does the private equity program sit and what might the response might need to look like? And so A lot of organizations came into this current period, either, either at or very close to their desired allocations within private equity. And I think that makes the situation a little bit different than what we saw with the global financial crisis. And so really trying to have as clear-eyed a conversation as we can about what can they tolerate in terms of allocations over the near term? What does the liquidity picture look like? What spending needs might be out there for the organization and how do they ne…

AI assessment note: “viewing the private equity program, not in isolation. But as part of the entire investment portfolio”

Q a different state of affairs and where people were in their desired allocations, but you did have this markdown of the public assets and a much more delayed markdown, if there even was, of the private assets which caused those allocations to go up and some concern over those commitment lines. How are people thinking about valuation of all of their private assets in the context of their whole portfolios?

A Doing a couple of things. First, I'm reaching out to GPs to have that conversation early and often, recognizing there's a fair amount of estimation involved in the near term, but trying to get a sense of what those shadow valuations look like, what's happening at the portfolio company level that might give us an indication as to what that next set of quarterly valuations could look like. So that's one sort of the bottom up exercise and direct conversation with the general partners. And then in addition to that, trying to take the experience from the global financial crisis and applying some of those rough experiences to the current situation and saying, what did we see then in terms of lag and severity of the markdowns? What would that look like if a similar situation played out? Recognizing that it's a different environment, but what would that sound like? What would that look like for the current portfolio? So some modeling going on at the moment, but also a recognition that a lot of that will be Best guesses for the time being, and we'll have to wait until September year end before we have real clarity on it.

AI assessment note: “Doing a couple of things. First, I'm reaching out to GPs to have that conversation”

Q So after 20 years at Cambridge, what was it like to step out into a new adventure?

A It was equal parts exciting and scary. So, you know, I really grew up with Cambridge, you know, it sounds, sounds a little tongue-in-cheek, but it's true. I joined when I was 21 years old, and so everything, every memory that I had in some way, shape, or form involved Cambridge, so I expected it to be a challenge. Parts of it work, but, but on the whole, it's been an amazing transition. Lots of overlap in terms of the content, as you'd expect. Lots of overlap in terms of the clients Cambridge served and membership base as ILPA. So the things that I thought might translate well really have translated well and have the benefit of a really terrific working relationship with Cambridge at, at ILPA. So colleagues from Cambridge aren't ever too far away.

AI assessment note: “It was equal parts exciting and scary.”

Q That makes sense. Well, let's turn to this new environment. And I guess I know you've been speaking to a bunch of your LPs as much as you can. What is foremost on their minds right now?

A Like you and me, I think at the top of the list for them is how to work and work effectively in a remote environment. And so I think that adjustment that most of us are going through In terms of trying out new technology, new sort of paths for communications. I mean, that, that's front and center for everyone at the moment. And I think it's fair to say some are well positioned coming into this and others not, but priority placed on communicating effectively in a routine manner, trying to stay connected in creative ways. We've heard of virtual happy hours. We've done a couple of our own and hoping that the need for those goes away very quickly. But in the end, Recognizing that it's a grand social experiment that we sort of all embarked on here and trying our best to stay connected. So it's easy to say it's a people business. It really is a people business. And I think if anything, the current environment has just reinforced that notion. So I think it starts there.

AI assessment note: “at the top of the list for them is how to work and work effectively”

Q Are there any early indications yet what the LPs are seeing in terms of potential drawdowns of commitment lines?

A It's very early days, but that's obviously something that the LPs are focused on. We just gathered about 500 folks for a town hall conversation late last week and asked that question. And the early read is that halls haven't changed dramatically in the short term, but folks are expecting to see some of that. LPs are asking their GPs, what's the current situation in terms of the reserves for follow-on investments? How are they thinking through those considerations? What's being done at the fund level versus what direction is being given to the portfolio companies themselves? Where is that reserve management really taking place? So at the moment, again, given how early we are in this most likely, there's some of that re-estimation of capital call pace and volume, but it's foggy. I think that's the easiest way.

AI assessment note: “the early read is that halls haven't changed dramatically in the short term”

Q Through this period of time, are there any particular recommendations or efforts that you're making at ILPA coming out of these conversations?

A Yeah, there have been. It starts with communication. So communicate, communicate, communicate internally with one another, with your stakeholders. So making sure that investment teams are well connected with their boards, their investment committees, that will help. I think that's an obvious lesson learned from the last downturn. It really is an opportunity, Ted, for all the things that ILPA has been talking about for years now to take a step forward. I think in terms of governance, in terms of transparency, in terms of reporting, that whole notion of alignment of interest, if it's not going to happen now, it's never going to happen. It matters more than, than ever. So we've been trying to stress, not just in the moment, The critical nature of these things and the ways in which GPs and LPs can make some progress on that front. Again, pointing back to the principles, guidance, but also trying to be clear that this matters to us from a long-term This crisis. Obviously, there was a spotlight train on private equity, and that will continue. There's a lot of noise, and I don't mean that in the passing sense, but a return to private equity being in focus should absolutely be expected. So there are lots of opportunities for us to do well from a reputational standpoint by doing the right things during this crisis if you think about how workers are going to be treated. Our participation…

AI assessment note: “Yeah, there have been. It starts with communication. So communicate, communicate, communicate”