LPs offer mixed views on GP ownership - AVCJ Forum

During a discussion on the evolution of GP and LP relations at the AVCJ Forum, Ivan A. Vercoutere, managing partner and CIO at LGT Capital Partners, said that while his firm is willing to be a significant first-close investor, it had refrained from taking an interest in portfolio GPs.

"We strongly believe the GP should be independent," he said. "While it might be interesting for us, it will change the level of a GP's independence down the road; things change, markets change, and they might want to do something not that is suitable going forward."

On the other hand, Jacques Demers, global head of investment partners and partnerships at OMERS, stressed that making sure interests with fund managers were aligned trumped concerns over independence.

"For us the difference is our accountability to the board and to our stakeholders, so while GP independence sounds good, it just doesn't really cut it for us and I am not sure what it gives us," he said. "From our perspective, accountability to our partners - peer institutions and GPs who align their objectives with ours - really works."

However, LGT's Vercoutere stressed that if an LP had 10 relationships with mid-market GPs in the region and only held a stake in one of them, there would be the potential for conflicts of interest. By contrast, OMERS' Demers said that this was not the most important factor for his fund, saying ultimately his job is to achieve certain fixed returns.

"Our overriding objective is to achieve 7-11% returns, risk appropriate. In 2008 we lost 15%, and as a defined benefit fund we have to get fully funded and achieve those absolute returns, " he said. "Over the last five years we have achieved a return of about 9.5%."

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• LPs
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• LPs
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• Ontario Municipal Employees Retirement Scheme
• LGT Capital Partners
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