Reporting guidelines give private equity funds detailed recommendations about the disclosure of additional information to investors. They aim to homogenize the information for investors, increase transparency, and thus improve trust and confidence between general partners and investors. Two main reporting guidelines have been developed in the past.
For Europe, the European Venture Capital Association (EVCA) first introduced industry-reporting guidelines in March 2000, which were updated in June 2006. EVCA distinguishes between requirements that fund managers have to report if they claim compliance with the guidelines and recommendations that must not necessarily be followed. Semiannual reports are required; quarterly reports are recommended.
For the United States, the Private Equity Industry Guidelines Group (PEIGG) issued reporting and performance measurement guidelines in March 2005, which were developed under the participation of the British Venture Capital Association (BVCA) and EVCA.
PEIGG guidelines require quarterly reporting. Both EVCA and PEIGG industry-reporting guidelines do not address financial statements of private equity funds but intend to promote additional information on fund level, including capital accounts.
Although on fund level, the information requirements of EVCA and PEIGG are quite similar, EVCA guidelines require much more reporting on portfolio company level, for example, location of head office, business description, co-investors. Interestingly, concerning portfolio companies’ balance sheet items, securities ownership and valuation, and other performance metrics, PEIGG guidelines are more precise than EVCA guidelines.
For reasons of completeness, the private equity provisions of the Global Investment Performance Standards (GIPS) issued by the CFA institute in February 2005 should be mentioned, although they focus primarily on fundraising rather than permanent reporting during the fund’s lifetime.