IPEV: A set of Tools for Private Equity July 4, 2012 Monique Saulnier Managing Partner & CFO Sofinnova Partners
IPEV History and Background Initiative of 3 founding associations: AFIC, BVCA, EVCA To respond to global standardization needs Born in 2005 in Europe Valuation Guidelines released in 2005 Adopted by around 40 associations worldwide Today: 80% of the LPAs outside the US refer to the IPEV Valuation Guidelines In the process of releasing Reporting Guidelines 2
IPEV Mission (1) The Mission of the IPEV Board is to provide high quality, uniform, globally acceptable, best practice guidance for Private Equity and Venture Capital Valuation and Reporting purposes. The IPEV Board: Monitors market practices Proposes amendments to the Guidelines following any relevant changes to accounting standards and market practices Formally reviews the Guidelines every three years Has an advisory role and gives guidance on the application of the Guidelines to all stakeholders in the private equity and venture capital industry including practitioners, investors, regulators and auditors 3
IPEV Mission (2) In fulfilling its mission IPEV seeks to be: Independent not representing the particular interests of any one set of stakeholders in PE and VC investing, be it GPs, fundsoffunds, LPs or service providers. Balanced to the maximum extent possible reconciling the interests and points of view of GPs and LPs. Professional producing very high quality output, making use of the contributions of experienced professionals drawn from the community of GPs, LPs, service providers and academia. Principles, as opposed to Rules based: Sufficiently flexible and allowing for different types of GPs and LPs formats to be set by mutual agreement between GPs and LPs Providing examples as opposed to templates 4
IPEV Valuation Guidelines First release in 2005 Version 2 in 2009 Principles applied (Fair Value, consistent with IFRS/US GAAP) Consulted entities/stakeholders before official release of updated versions of the Guidelines: Endorsing associations, GPs/LPs, Audit firms, Advisors to the industry, Regulators and Standards Setters (e.g. IASB, IVSC...) Current status => We will start a review this year (2012) with the objective to release a new edition of the Guidelines Geographical coverage of endorsing organizations (see next slide) 5
The IPEV Valuation Guidelines: A Worldwide Coverage (as of June 2012) IPEV s geographic coverage: Country or regional trade body having formally endorsed the IPEV Guidelines US Representatives on IPEV Board but no formal endorsement by trade bodies No formal endorsement as of today 6
IPEV Reporting Guidelines In 2010 EVCA asked IPEV to take over its reporting guidelines Principles applied (fair presentation and full disclosure, best practice, voluntary, Essential and Additional disclosures, examples vs templates, investor reporting vs financial reporting i.e. no duplication of GAAP/IFRS reporting, ESG) (N.B.: the first EVCA reporting guidelines were issued in 2000, among the participants to the task force at that time: Access Capital Partners, HarbourVest Partners, Virginia Retirement System, Altius Associates, PGGM, LGT Capital Management) EVCA released a new version in 2006 7
IPEV Investor Reporting Guidelines Consulted stakeholders: First circle December 2011January 2012 (including ILPA) Public consultation AprilJune 2012 Coordination was sought with ILPA in drafting process. Endorsing organizations: the process will start after official release of the IPEV Investor Reporting Gudielines Current status: Review of the comments received during the consultation procedure that ended on the 8th of June 8
IPEV Governance Structure Association Members Association Technical Resource Group Members General Assembly of Endorsing Association IPEV Board IPEV Association Elects IPEV Board members Can object to the content of the Guidelines issued by the IPEV Board Provides Guidelines Promotes the work of the IPEV Board Advises the IPEV Board Secures funding 9