Introductory guidance

The terms General Partner, GP or manager, and Limited Partner, LP or investor are used interchangeably throughout these Guidelines.

These Guidelines are not intended to specifically cover legal and regulatory reporting requirements; where applicable, however, they should be read in conjunction with such reports and consistency between the contents of such reports would be expected.

These Guidelines are not intended to take all national, regional, or international reporting regulations into account. Adherence to these Guidelines does not replace the investor's obligation to comply with any such regulations on e.g., content, process or reporting deadlines.

Furthermore, these Guidelines do not cover information to be included in the fundraising documents, annual investor meetings, meetings of the LP Advisory Committee (“LPAC”) and other conference calls or ad hoc communication with investors. However, as with the legal and regulatory reports, all such information should be broadly consistent and not contradictory to the reporting required from these Guidelines.

The Guidelines present two forms of guidance:

1. Requirements that must be applied, where relevant for a fund, to enable a fund manager to claim compliance with the Guidelines. These requirements will ensure that investors are able to monitor their investment in a fund, assess the progress of the fund and the portfolio companies in which it invests and understand the developments within the geography, sector and industry in which each of the portfolio companies operates.

2. Additional possible disclosures, whose adoption is not considered necessary for a fund manager to claim compliance with the Guidelines. These items are sometimes provided by fund managers to convey more in-depth information to investors but are considered not to be key in nature in order to be compliant with the Guidelines.

This version of the Guidelines augments the versions released in 2015 and 2018 and continues to develop our approach to be the “voice” of all Private Capital. Private Capital managers across Europe and globally are targeting more diversified risk adjusted returns by launching new fund vehicles to provide financing to businesses while also engaging in recently popular activities in the Private Debt space and secondary transactions (either GP-led or LP-led). The evolution of the private equity sector gives rise to the need for modified reporting and valuation requirements specific to the nature of such investments.

As a result of this, the Guidelines now contain specific sections for the following types of funds in addition to the “standard” direct Private Equity fund contemplated in the previous Guidelines:

• Real Estate

• Private Debt (including Credit funds)

• Infrastructure

• Venture Capital

• Fund of Funds

• Secondary Funds

• Other strategies: Special Situations/Distressed funds, Litigation funds, Turnaround/Restructuring funds and similar

The specific sections for the above fund types have been included to allow managers of those funds to comply with the Invest Europe Guidelines whilst still maintaining the expected style, form and content that investors in those funds would require. All requirements set out in other parts of these Guidelines are expected to be followed, in full, by all fund managers wishing to state compliance with the Invest Europe Guidelines.

In performing the current update, the PSC has considered other best practice and template guidance in the sector including those published by ILPA. A detailed comparison has been performed against the most recent ILPA guidelines, issued in Q3 2017. In addition, a review of the International Private Equity and Venture Capital Valuation (IPEV) Guidelines, issued in December 2022, was also performed, and consequently Invest Europe endorsed the IPEV Guidelines in March 2023. As a result of this, it is the view of the PSC that compliance with these Guidelines (including certain of the additional possible disclosures) means that a manager will be substantially compliant with all ILPA information requirements.

The Guidelines have also been updated to cover key emerging issues such as Fund Bridge and Leverage Facilities and enhancements to ESG reporting. Our aim remains to ensure that the Guidelines remain among the most advanced and user-friendly guidance in the Private Capital sector.

Regarding ESG reporting, it is worth acknowledging that this can cover myriad factors. Consequently, reporting on sustainability risks, factors and/or environmental, social and governance (“ESG”) measures in a way that highlights an organisation’s successes and values can be a daunting process – with so many providers, frameworks, and (increasingly) regulations demanding different datasets from one another. The pivotal task for those responsible for managing and reporting on sustainability performance is to reconcile the firm’s own approach with best practices for its industry using applicable sustainability and ESG standards and doing so in compliance with the relevant ESG regulation. The ESG reporting landscape continues to evolve and as such the guidelines for ESG will need to be updated regularly to keep in line with current requirements and best practices. Invest Europe published guidance to help members understand the landscape of ESG policy, performance, reporting and regulations. These ESG Reporting Guidelines were launched publicly along with a revised ESG reporting template in July 2023. The guidance contained here-in borrows from that more in-depth ESG specific guide. The ESG Reporting Guidelines will be updated more frequently and should be the primary source for investors’ guidance on ESG matters.

The voluntary Invest Europe ESG Reporting Guidelines should be considered alongside these Invest Europe Investor Reporting Guidelines and should be regarded as effective for reporting periods beginning on or after 1 January 2023. The Invest Europe GP-LP ESG reporting template, which is intended for investor reporting (as opposed to public reporting), is also not mandatory. It is a voluntary tool and reference for private equity and venture capital (PE/VC) practitioners, including both GPs and LPs, to use at their convenience.

Fund managers can therefore also claim compliance with the Invest Europe Investor Reporting Guidelines (under the provisions set out above) if they are not required to issue or do not issue ESG Reports and/or are using a different ESG reporting framework.

As with most aspects of their relationships, the managers (GPs) of Private Capital funds and their investors (LPs) negotiate the required disclosures in their funds on a bilateral basis during the fundraising process. As such, it is not the intention that these Guidelines should in any way restrict the disclosures made and information transferred especially where that information flow is already established. However, these Guidelines are designed to assist in the negotiations and form a strong baseline level of information flow on a regular basis.

In the same way, the examples included in the Guidelines are not intended to be “standard” or “generic” templates used by all funds but are sensible starting points, particularly for new GPs in the sector.