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During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Forget Adderall. Traders now pop chia seeds to stay focused and energized
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
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In early 2011, KKR endorsed the principles. KKR for the first time has said it must meet a minimum return for investors before it takes any profits for itself. Blackstone Group, the biggest buyout company, and TPG, the architect of buyouts from Continental Airlines to J. Crew, followed KKR’s endorsement. “Like other folks in our industry, we may not support every provision, but Blackstone has largely complied with these principles for many years—long before the existence of ILPA—and we will continue to do so,” Blackstone President Tony James says. In 2010, Blackstone won its first-ever investment, of $200 million, from Oregon’s public employee pension plan after the firm announced that commitments of more than $1 billion would lower the annual management fee to 1 percent from 1.5 percent.
There is a sense among private equity managers that the changes in reporting are permanent, but the fee question may be more complicated. The best managers may at some point be able to dictate their own terms again, and potentially charge higher fees. “It’s a market, and every fund is a negotiation,” says Steven N. Kaplan, a professor at the University of Chicago Booth School of Business who follows the industry closely. For now, the pressure is on. ILPA is trying to introduce yet stricter guidelines, and the SEC is weighing whether to extend oversight to about 3,500 advisers and demand they disclose information about investors, employees, assets they manage, and potential conflicts of interest.
“The crisis provided a real opportunity for LPs to stand up and say, ‘There are certain things that aren’t working for us and aren’t fair,’” says Mark Wiseman, executive vice-president for investments at the Canada Pension Plan. “It was the classic example of when the tide went out there were any number of GPs and organizations that weren’t wearing bathing suits.”
For his part, LeBlanc remains intent on seizing the opportunity to make sure those who were naked learned their lesson. “After the crash, we had a voice,” he says, “and LPs made it clear that we aren’t just going to fold up and go away.”
Keehner is a reporter for Bloomberg News. Kelly is a reporter for Bloomberg News.
