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Chance of clear skies

by Alice Murray 24 July 2019

Officially launched in April this year, the Adopting Data Standards (ADS) has already received backing from major LPs. With barely any promotion, publicity or active engagement efforts, what makes this initiative so special?

Solving private equity’s reporting puzzle continues to frustrate and vex GPs, LPs and vendors alike. So far, attempts to optimise fund reporting have been noble yet seemingly lacking. Templates such as ILPA’s were created for LPs. Wider reaching campaigns such as AltExchange were linked to commercial entities.

A newer addition to the mix – the Cost Transparency Initiative – developed by an FCA-backed working group earlier this year is the cause of yet more frustration along the path to efficient and flexible reporting. Demands for retroactively fitting granular details; providing breakdowns of fees where previously managers have only collected netted figures seems to make the reporting conundrum even more fiendish.

It’s clear a new approach is required. Could the Adopting Data Standards (ADS) initiative be the panacea the industry is so desperately seeking?

Perhaps ADS’s most encouraging feature is its non-profit status. Says ADS founder Lorelei Graye “It’s hugely important that this isn’t a commercial entity.” Indeed, the initiative’s forerunner AltExchange had a very similar objective but was wound down in 2018. ADS is building upon the idea for a data standard and doing so with a commercially neutral approach.

Know your place

That’s not to say AltExchange wasn’t an important project, or that the development of templates has been futile. Quite the opposite. Each endeavour is an integral learning step on the journey towards optimised reporting. And it’s worth noting that Graye was a key architect in building the ILPA template.

Undoubtedly, all of this learning has thrown up some powerful lessons. “We will never find one template or form when it comes to reporting, but we can achieve optimisation. We need to build a data standard, one that can be consumable in any system, in any jurisdiction, by any party,” says Graye.

Perhaps the most important revelation has been understanding the true scale of the problem. “This takes stamina and guts. We recognise we have to meet people where they are. This is complex, not impossible. It takes time and requires balance,” adds Graye.

Take your time

Many other fixes have been created under deadlines and have asked for immediate adoption. The ADS thinks differently. “In the short term the focus is on building momentum and consensus. The first step is getting LPs and vendors on board – we’re not even looking at GPs. We’re not an LP only organisation but we know it will take a few years to build trust.”

In fact, Graye foresees a lengthy journey ahead, “We’re not crazy about the timeline; we understand this will take time. We think it will take up to 10 years to develop and implement a data standard.”

Another hugely compelling feature of the ADS is its cross industry, cross jurisdiction, cross technology, cross strategy approach. “This can’t be LP or GP only. This needs to be cross industry; we need vendors, consultants, tech providers, GPs and LPs to all be heard,” says Graye.

“The standards have to be consumable in any system. We’re not working against the ILPA template or Invest Europe guidelines, it’s about the cross reference. We don’t care what transmits the information. This is about building a universe of data points; creating the universal language and definitions. As long as the labels are adhered to, the tech and the systems don’t matter,” adds Graye.

Speaking my language

The ADS focuses on the language of data. It’s about laying down a universal language of data points, and the definitions of each term so that whatever the system, template, participant or strategy, everyone is working from the same framework.

This is by no means a quick fix or some kind of sticking plaster. This is completely changing the way we think about reporting, not in terms of forms of templates but instead, breaking it down into data tags and definitions.

“Today, ADS is a campaign. We’re bringing together industry leaders who want to contribute their time and talent to build momentum and trust behind the ultimate goal. In the future, the ADS will be a global forum for developing the data standard and maintaining it as new reporting obligations come to the fore,” explains Graye.

“This initiative is about supporting the industry, people need to know that. We’re not forcing square pegs into round holes. That’s what will take time. In the meantime, we’re building reputational buy in and membership, backing and commitment to reach the long-term goal,” concludes Graye.

To find out more about the ADS initiative, click here.

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