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There’s a growing demand for pension funds to justify their costs. The costs that are hardest to pin down relate to investments in private markets – and private equity in particular. They are also often the most material.

Lorelei Graye, Founder and President of ADS Initiative
John Simmonds, Client Relationship Manager, CEM Benchmarking

 We have lots of painful experience to share. That’s why I knew I was going to like Lorelei Graye before I met her. Lorelei’s #NotAnotherTemplate hashtag summed it up and made me roar! We also have a shared experience in trying to collect data from General Partners (GPs – fund managers for private assets) and a determination to solve the problem.

Lorelei is the driving force behind the Adopting Data Standards Initiative (ADS). ADS’s mission is to develop and implement an electronic reporting standard that allows industry participants to automate with any technology or platform. Put simply, ADS aims to help everyone in the industry capture, share and use data efficiently and consistently. CEM is a founding member of ADS and an advocate.

There’s been a global focus on developing templates - ILPA and CTI - to enable funds to ask for data from GPs in a standardised way. This should help both sides – the investor in getting the data they want and the GPs in having a consistent and efficient means to deliver that data. 

The advent of those templates has moved us forward, but it hasn’t delivered a silver bullet. Some GPs are not eager to comply. Data quality is variable. Templates are amended, defeating the objective. On top of this, many institutional investors prefer their own templates, which adds to the confusion and frustrates GP’s efforts to scale. PDFs and spreadsheets were not designed to transport data – they present security risks and there are inherent fragilities when it comes to the extraction of data. All this means that we still have some way to go.

Despite the hashtag, ADS is not against the use of templates. On the contrary, we are trying to iron out the hurdles to automation. We are doing this by standardising the technical language through data definitions and tagging, i.e. placing an electronic code on each value within a document or file so that the file can be fed automatically into another software or technology. Optimisation is the goal. In fact, ADS supports templates because a common reporting language will standardise the rules on which they are built and populated i.e. it will make it easier for GPs to understand the requirement and supply the data, and easier for anyone to extract and use the data. Where accountancy bodies produce guidelines for the presentation of information in financial statements, ADS wants to perform the same role for the digital delivery of accounting and performance data for private investments. 

It’s a diverse and truly global market which makes it a challenge to gain widespread support. The good news is that there is some concentration in the market, with a number of globally important institutional asset owners that have huge sums invested and who therefore wield substantial influence.  Some of these asset owners are already ADS members and we hope more will follow. Their influence will propel us forward but to be successful we’re building ADS as an organisation that everyone – GPs, investors, regulators, advisers etc - can work with:

·       Independent
·       A sound governance and operating model that supports collaboration
·       Representation from all stakeholder groups
·       Without commercial incentive (not-for-profit)

ADS is off to a flying start, but we need to keep a foot on the throttle and build commitment. If you are hoping for a solution that levels the playing field for everyone and you invest in private markets then ADS wants to work with you.