Limited partner (LP) capital in private equity is still moving. About 70% of institutional LPs surveyed in January 2026 planned to maintain or increase private equity allocations. But the criteria for determining where that capital goes have sharpened considerably. Fundraising conditions remain constrained, with LP commitments channeled more selectively to managers with established track records and demonstrated operational credibility. Re-ups are taking precedence over new relationships.
For fund managers in this environment, transparency has become a decisive factor in due diligence, re-up conversations, and the increasingly structured criteria LPs apply before capital moves.
What Are LPs Scrutinizing?
The transparency factors LPs identify as most in need of improvement remain consistent across surveys: governance, valuations, conflicts of interest, and the quality of reporting and communications. Some progress has been made, but LP expectations continue to rise faster than the pace of improvements.
The data on LP-GP tension is especially pointed. More than a third of LPs (36.6%) identify transparency and reporting specifically insufficient or delayed data sharing, as the single biggest source of friction. It sits above fee disputes, governance disagreements, and strategic misalignment.
The complexity of current fund structures only amplifies the problem. Roughly 30% of LPs consider assets held in continuation vehicles as distressed or challenged, and 22% categorize them as complicated. In that context, the demand for greater transparency is not a procedural preference. It is the mechanism through which LPs assess whether they can trust what they see.
The Shift to ILPA-Aligned Reporting
In January 2025, the Institutional Limited Partners Association (ILPA) released a materially updated reporting template and a new performance template, effective Q1 2026 for funds in their investment period as well as for all new funds commencing operations from January 2026 onward.
These changes are specifically designed to enhance transparency. The reporting template expands required partnership expense categories from 9 to 22, giving LPs a complete and itemized view of fees, management expenses, and internal chargebacks. The performance template also introduces standardized reporting for IRR and TVPI/MOIC. Notably, both figures must be reported with and without the impact of fund-level subscription facilities, directly addressing long-standing LP concerns about return distortion.
ILPA-aligned reporting is now the institutional baseline. The critical question is not whether to adopt these standards, but whether current operational infrastructure can produce ILPA-aligned reports consistently, without the need for tedious manual reconstruction every quarter.
Where’s the Gap?
Most fund managers understand what LPs expect. The gap funds need to address is the one between LP expectations and what their infrastructure can produce without a lot of extra manual effort.
A private equity manager with $8B AUM, for example, typically runs fund accounting through an administrator, portfolio monitoring through an in-house tool, and LP package assembly through the IR team in Excel. Each system contains accurate data. But getting them all to align on the same numbers for the same reporting date takes three to four days of manual reconciliation every quarter. A mid-cycle LP query about a position’s valuation methodology requires pulling data from two systems and the investment team’s working files, with no live connection to either.
That process is visible to LPs. Valuation disagreements were the most common reason deals failed to close in 2025, and remain a key obstacle in diligence more broadly. The same dynamic plays out in LP operational due diligence. When valuation governance is undocumented and data lives in disconnected systems, the fund’s inability to produce clean, consistent answers becomes a critical issue, regardless of whether the underlying valuations are sound.
The Return on Getting It Right
The prescription for private markets managers in 2026 is not complicated. Winning firms build systems, not slogans. In the context of LP transparency, funds need to produce operational evidence consistently at the cadence LPs expect, rather than assemble it under pressure each reporting cycle.
Return dispersion between upper- and lower-quartile managers has widened, and fundraising pressure falls hardest on those who can’t point to a verifiable track record. The managers who are regaining LP momentum are those who demonstrate credible, consistent performance, not just in investments, but in how transparently they run and report on their funds.
Operational evidence does not appear in investor letters. It appears in reports that reconcile without revision, mid-cycle queries that get answered the same way every time, and due diligence that ends with capital moving. The managers building the operational foundation for all these capabilities will protect their re-up relationships. Data increasingly shows these relationships are the primary channel through which institutional LP capital flows in 2026.
Indus Valley Partners works with 235+ fund managers representing $6.5T+ in AUM. IVP for Private Funds is built for private equity, private debt, real estate, CLOs and infrastructure managers who need consistent, audit-ready LP reporting at scale. Learn more about IVP for Private Funds or contact us to schedule a demo now.
