EVCA Handbook Professional Standards for the Private Equity and ...

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54 EVCA Handbook Professional Standards for the Private Equity and Venture Capital IndustryWWW.PRIVATEEQUITYEVALUATION.COMWWW.PRIVATEEQUITYEVALUATION.COMndorsement16• Material amendments or changes to the FundFormation Documents• A notification of the timing and nature ofFund meetings• The extent to which NAV or partners’capital has been adjusted to reflect earned,or deemed Carried Interest and potentialclawbacks• If an advisory committee has decisionmakingpowers, description of decisionstaken including background information• A statement of compliance with the IPEVValuation Guidelines, with exceptions, if any,describedAdditional Disclosures• Presentation of a value progression chart,showing the change in Fair Value of theFund over its life, which may includetotal Contributed Capital, cumulativeDistributions, and residual Fund value net ofmanagement fees and Carried Interest• Statement of compliance with the Investmentpolicy outlined in the Fund FormationDocuments• If applicable, a statement of compliance withenvironmental, social and governance orother responsible investing parameters of theFund• If applicable, the extent to which the Funduses an internal or external third partyvaluation expert• If applicable, key findings in the Fund’sadvisor or external administrator’sindependent compliance or control reports• Comparison of historical realisations to lastreported Fair Value1.3. Fund StatusPurposeThe Fund Status provides Investors with currentperformance and commitment information.Essential Disclosures• An aggregated Investor summary of:− Total Contributed Capital / Draw Downs /Paid In Capital− Total remaining Commitment callable(available for drawdown) / Uncalled Capital− Impact of management fees and other fees(explain if included in Committed Capitalor if in addition to Committed Capital)• Cumulative Distributions to the Investorsand to the Fund Manager, including CarriedInterest, if any• If applicable, recallable Distributions• Total Fair Value of portfolio• Total other assets and liabilities, if applicable• Net Asset Value (total Fund and net to LPs /Investors)• Gross Portfolio IRR• Fund Net IRR to LPs / Investors• Multiples to LPs / Investors− Distributions to Paid In Capital (DPI)− Fund NAV (net of management fees andCarried Interest) to Paid In Capital (RVPI)− Total value to Paid In Capital (TVPI)− Paid In Capital to Capital Commitment(PICC)• Total invested in Portfolio Companies• If applicable, note of:− Leverage of the Fund, includingdebt, guarantees, charges, warranties,indemnities or other contingent liabilities− Guarantees made by the Fund to or onbehalf of Portfolio Companies, and theirimpact on Fund Fair Value, if anyAdditional Disclosures• Best estimate of potential Draw Downs andDistributions for the next reporting period• Total additional committed to PortfolioCompanies and planned for follow-oninvestments, as requiredInternational Private Equity and Venture Capital Investor Reporting Guidelines l Edition October 20122. Investor Information2.1. Cash Flow and Net IRRCalculationPurposeThese guidelines have been developed by the IPEV Board with the valuable applicable: input and endorsementof the following associations:The Cash Flow Schedule provides details onCapital Calls and Distributions to allow LPs tounderstand aggregate LP level cash flows used tocalculate Fund Net IRR to LPs.AFIC - Association Française des InvestisseursEssential Disclosuresen Capital*AIFI - Italian Private Equity and Venture • Aggregate Capital cash flows Association between Fund and LPs(combined) by dateAMEXCAP - Mexican Private Equity • AssociationNet IRR (net of Carried Interest)AMIC - Moroccan Private Equity and Venture Capital AssociationAdditional DisclosuresAPCRI - Portuguese Private Equity • and Aggregated Venture for the Capital Fund, an Associationanalysis ofcumulative proceeds distributed, withAPEA - Arab Private Equity Association sufficient detail, such as cost, gain andASCRI - Spanish Private Equity and Ventureincome, asCapitalapplicableAssociationATIC - Tunisian Venture Capital Association 2.2. Individual CapitalAVCA - African Venture Capital Association AccountsPurposeAVCAL - Australian Private Equity and The current Venture period Capital and since inception Association CapitalAccount information provides individualAVCO - Austrian Private Equity and Venture Capital OrganizationInvestors with current and cumulativeBVA - Belgian Venturing Association information on their individual investment inthe Fund, and allows for analysis of incomeBVCA - British Venture Capital Association*allocations.BVK - German Private Equity and Venture Capital Association e.V.Essential DisclosuresCVCA - Canada’s Venture Capital • and Information Private for Equity the relevant Association investor− Total CommitmentCVCA - China Venture Capital Association− Percentage ownership of the Fund:CVCA - Czech Venture Capital and Private − Percentage Equity ownership Association of all LPcommitmentsDVCA - Danish Venture Capital Association − Percentage ownership of entire Fund(including GP and parallel funds)EMPEA - Emerging Markets Private Equity Association− Profit sharing percentageEVCA - European Private Equity and Venture Capital Association*− Total Contributed Capital (sinceFVCA - Finnish Venture Capital Associationinception)GVCA - Gulf Venture Capital Association − Unfunded CommitmentHKVCA - Hong Kong Venture Capital AssociationHVCA - Hungarian Venture Capital and Private Equity AssociationILPA - Institutional Limited Partners AssociationIVCA - Irish Venture Capital Association− Total Contributed Capital (current period)− Distributions (current period -designate ifany distributions are recallable)− Distributions (since inception -designate ifany distributions are recallable)− Fund performance, noting separatelycumulative and current period, as− Management fees− Operating income / loss− Realised gains / losses− Unrealised gains / losses− Specify allocation to Carried Interestpartners, if separate from the GP, includingany non-standard or asymmetricalallocations, such as LP opt outs or specialLP provisions, if any• Capital account at Fair Value at the end of thereporting period• Confirmation that LP NAV is reported net ofunrealised Carried Interest attributable to the GP.Alternatively, provide an estimate of unrealisedcarry assuming that all Investments are realised attheir reported Fair Value at the measurement date• Treatment of negative LP Capital Accounts,if anyAdditional Disclosures• Upon request, a cash flow schedule detailingindividual Investor’s amounts and dates ofDraw Downs and Distributions since inception2.3. Capital Call NoticesPurposeOver the life of a fund, Managers will draw downcapital from Investors and they should notify themfor each Draw Down in accordance with the FundFormation Documents. Any net Capital Calls (netof Distributions) should include the informationitems under both Capital Call and Distributionnotices noted below.Essential Disclosures• Due date of the Capital Call• Amount of the Capital Call in total for theFund and for the relevant InvestorInternational Private Equity and Venture Capital Investor Reporting Guidelines l Edition October 201217
55 EVCA Handbook Professional Standards for the Private Equity and Venture Capital IndustryWWW.PRIVATEEQUITYEVALUATION.COMWWW.PRIVATEEQUITYEVALUATION.COMendorsement18• Wire transfer instructions for the Capital Call• Commitment held by the individual Investor• Cumulative Called Capital (inclusive ofthis Capital Call) and remaining UnfundedCommitment• Reason for the Capital Call, and whereapplicable an analysis of the individualcomponents of the Capital Call2.4. Distribution NoticesPurposeWhen Managers make Distributions, Investorsshould be notified, with each Distribution, theinformation required in accordance with the FundFormation Documents.Essential Disclosures• Payment date of the Distribution• Amount of the Distribution in total for theFund and for the relevant Investor• Cumulative Distributed amount (inclusiveof this Distribution) individually for theInvestor and aggregated for the Fund• Statement as to whether the Distribution isrecallable• Allocation of the Distribution between cost,gain and income• Bank account details identifying where theDistribution will be madeAdditional Disclosures• Description of the individual proceedsdistributed, with sufficient detail, such as cost,gain and income, as applicable.to, or deemed allocated to the GP. The Fund Depending on the type of Fund, for example3. Fees, CarriedFormation Documents dictate the mechanics of venture capital Funds, the information notedthe Carried Interest. Calculations are generally below may not be applicable or may be deemedInterest and Relatedmost appropriate when presented from inception confidential and as such would not be disclosed.of the Fund.Party TransactionEssential DisclosuresThese guidelines have been developed Carried by Interest the calculations IPEV Board are unique with to each the valuable • Portfolio input Company and name endorsementInformationFund and vary according to the type of Fund. • Whether the company is quoted orof the following associations:Essential Disclosures should provide sufficient unquoted; if quoted, state the ticker symbol3.1. Management Fees andtransparency to allow LPs to analyse the Fund • Date of investmentRelated Party Transactionsallocation of Carried Interest.• GeographyPurpose AFIC - Association Française des Investisseurs en Capital*• IndustryProviding detail on how fees paid by the FundEssential Disclosures• Percentage ownership; diluted and / orAIFI - Italian Private Equity and Venture Capital Associationare calculated allows Investors to analyse the• Description of the Carried Interestundiluted, as applicablemanagement fees charged AMEXCAP to verify compliance - Mexican Private Equity Associationcalculation or excerpt from or reference to the • Cost of Investment (cumulative andwith Fund Formation Documents.Fund Formation Documents, including an remaining)AMIC - Moroccan Private Equity and explanation Venture of Capital the basis of Associationthe calculation • Fair Value of the Investment (in accordanceEssential Disclosures• Key mechanics included in the calculation of with International Private Equity and VentureAPCRI - Portuguese Private Equity and Venture Capital Association• Management fees paid and / or accrued byCarried Interest, including where applicable: Capital Valuation Guidelines)the Fund and the basis APEA of calculation - Arab Private Equity Association − Clawbacks• If applicable, the cost or valuation base used− Tax allocations, if anyAdditional DisclosuresASCRI - Spanish Private Equity and Venture Capital Associationto calculate the Fund management fees− Hurdle Rate calculations• Stage of investment• The treatment of transaction ATIC or - Tunisian other Venture Capital Association• Fund level Carried Interest paid from • Meaningful performance information such as:fee income that can be offset againstinception to the Reporting Date and since − Total Return for each Investmentmanagement fees will AVCA be specific - to African each Venture Capital Association the last Reporting Date(Including realised proceeds)individual Fund. Where applicable, Fund• Fund level Carried Interest allocated or− Multiple of invested capital (MoIC)AVCAL - Australian Private Equity and Venture Capital Associationdisclosures should include:deemed allocated from inception to the − Holding period− Statement of benefits AVCO and fees - received, Austrian Private Equity and Venture Reporting Date Capital and since Organizationthe last Reporting − Gross Portfolio IRR (see section II)delineated by principal categories (e.g.Dateunderwriting fees, transactionBVA - Belgianfees,Venturing Association • Clawback payable, if applicable4.2. Realised Portfolio Summaryconsulting fees, directors BVCA and - monitoring British Venture Capital Association*Purposefees, deal fees, broken deal fees, etc.)Starting from inception, a Realised Portfolioreceived by the Fund BVK Manager - German or its Private Equity and Venture 4. InvestmentCapital Association e.V. Summary of a Fund provides information onaffiliatesrealised investments to inform Investors aboutCVCA - Canada’s Venture Capital and Private Equity Association− Fees received should be disclosed in totalPortfolio Informationsales or disposals that have occurred over the lifefor the Fund / Fund CVCA Manager - and China broken Venture Capital Associationof a Fund.down by Portfolio Company or transaction4.1. Current Portfolio Summarywhich generated them CVCA - Czech Venture Capital and Purpose Private Equity Association Essential DisclosuresThe Current Portfolio Summary providesDVCA - Danish Venture Capital Association• Portfolio Company name3.2. Carried Interestinformation on each Investment in the portfolio • Date of initial investmentPurpose EMPEA - Emerging Markets Private that Equity helps Investors Association analyse current holdings. • Disposal date (s), where applicableThe Carried Interest calculation provides• GeographyEVCA - European Private Equity and Venture Capital Association*information which allows Investors to analysethe Carried Interest deducted FVCA from, - allocated Finnish Venture Capital AssociationGVCA - Gulf Venture Capital AssociationHKVCA - Hong Kong Venture Capital AssociationInternational Private Equity and Venture Capital Investor Reporting Guidelines l Edition October 2012HVCA - Hungarian Venture Capital and AssociationILPA - Institutional Limited Partners AssociationIVCA - Irish Venture Capital AssociationInternational Private Equity and Venture Capital Investor Reporting Guidelines l Edition October 201219
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