Entity Setup

In V17 R2.39 and above, Private Equity Price Source (18452) dictates the source used for Private Market positions with Processing Security Type (3931) = EQCBFI (Capital Based Fund Investment). This is beneficial when the same Private Market is held in multiple portfolios, as separate sources can be set up for each portfolio without affecting the valuation of other holdings.

• Long Price Source (1282) is used pre-V17 R2.39 and the best practice is to set up a separate SMF for each entity holding the investment

Due to the sporadic nature of pricing, you may want to set the STAR 2 PACE entity flag Value At Cost - No Price Found (11454) = Yes if Private Markets are the only type held in the fund. This ensures holdings will always be valued in Data Management, even if no market price is available. Please consider the implications carefully if there are other types of securities in the fund, as the flag affects all of an entity's holdings.

• Note: when running the STAR to PACE process using Transfer Data - Batch or Transfer Data - Delta, Price Date Switch (9981) controls what happens in the case of a missing price, before falling back to Value At Cost - No Price Found

• The table below shows what happens on dates when there is a missing price in the various combinations of these elections

Reference Data

Market Data

Private Markets are priced based on market value. Each position is held as a single unit, allowing market values to be applied directly to holdings. If the same Private Market is held in multiple portfolios, a different market value is typically required for each portfolio. The portfolio-level Private Equity Price Source (18452) can be used to accommodate these scenarios in V17 R2.39+.

Pricing data is often not available until each fund statement is received. These statements include market values for the period end date and may be received on a delay. In these cases, Eagle recommends using estimated values for dates between the end of each statement period to smooth the valuation and performance returns. The exact method for deriving these values is a client decision. They are typically calculated based on the most recent available statement market value and any subsequent transaction activity. Another approach clients have taken, albeit less common, is to calculate estimated market values in line with the return of a benchmark.

Security Data

Private Market security master files (SMFs) are configured much like equities. They can be set up using Issue Viewer or Reference Data Center (RDC). Processing Security Type (3931) must be set to EQCBFI (Capital Based Fund Investment). Security Type (82) and Sub Security Type (1464) can be used to help further identify these investments as private equity, real estate, or other classes.

• Issue Name (961)

• Primary Asset ID (14) & Type (1432)

• Processing Security Type = EQCBFI (Capital Based Fund Investment)

• Price Multiplier (18) = 1.00

• Quantity Scale (19) = 1.00

• Issue Country (1418)

• Asset Currency (85)

• Settlement Currency (63)

• Income Currency (1186)

• Investment Period End Date (38): expected end date of the investment period

  • Available in V17 R2.38+

Trade Processing

Private Market transactions can be processed manually through Book Trade or using messages (refer to the Automation section for details). Enter the appropriate entity, security identifier, and trade (35)/settle (37) dates and click Submit to query for the Private Market.

The pending trades functionality supports Private Market transactions in V17 R2.37+. If you track pending trade activity, you can set up rules that determine how Eagle Accounting handles automated and manual trade cancellations within the workflow. For general information about pending trades, see Manage Pending Trades.

In V17 R2.38+, if Investment Period End Date is populated on the SMF and is prior to Trade Date, a warning will fire at trade time. This will not prevent the transaction from processing. The WARN can be changed to an ERR to make trades fail in this scenario.

Initial Commitment

The first step is to specify the total commitment amount. Right-click the Private Market and select Open > Initial Commitment (V17 R2.46+) or Initial Funding (pre-V17 R2.46). Critical fields are described below.

• Entity ID (1163)

• Effective Date (35)

• Settlement Date (37)

• Event Type (55) = LPOPEN

• Shares (40) = 1.00

• Commitment Amount (41): enter the total local amount of the commitment (must be positive)

• V17 R2.46+

  • Cash Amount Local (50): this will generate a cash disbursement, increase the Funded Capital (18386), and decrease the Unfunded Commitment (18388)

    • This is most common with positions acquired in the secondary market or when converting positions with prior capital calls

  • Cost Local (128): locked and defaulted to same value as Cash Amount Local

• Pre-V17 R2.46

  • Cost Local (50): same usage as Cash Amount Local described above

• Settlement Currency (63): dictates the currency in which cash will settle

• Settlement Net Amount (64): becomes unlocked if Settlement Currency differs from Asset Currency

• Transaction Notes (56) = INITIAL COMMITMENT (V17 R2.46+) or Initial Commitment (pre-V17 R2.46)

Commitment Adjustment

The total commitment can be changed after the position has been established. Right-click the Private Market and select Other > Commitment Adjustment (V17 R2.46+) or Commitment Adjustment/Capital Call (V17 R2.37 - R2.45) or Additional Funding/Capital Call (pre-V17 R2.37). Critical fields are described below.

• Entity ID (1163)

• Effective Date (35)

• Settlement Date (37)

• Event Type (55) = LPCOMMIT

• Transaction Name (1728) = Commitment Adjustment (V17 R2.37+) or Additional Commitment (pre-V17 R2.37)

• Select Lot (962): populated automatically after the entity and security information are entered

• Commitment Adjustment Amount (41): enter a positive number to increase the total commitment, or a negative number to decrease it

  • Field was named Additional Commitment Amount pre-V17 R2.37

• V17 R2.37+

  • Cash Amount Local (50): the amount entered here will generate a cash disbursement, increase the Funded Capital (18386), and decrease the Unfunded Commitment (18388)

  • Cost Local (128): locked and defaulted to same value as Cash Amount Local

• Pre-V17 R2.37

  • Cost Local (50): same usage as Cash Amount Local described above

• Cost Local (50):

• Settlement Currency (63): dictates the currency in which cash will settle

• Settlement Net Amount (64): becomes unlocked if Settlement Currency differs from Asset Currency

• Transaction Notes (56): defaults to Commitment Adjustment

  • Values can be added and changed using the PECALLTYPE Code Category

Capital Call

Capital calls (funding of the commitment) can include both capital investments and expenses/fees that impact the funded and unfunded commitments. Right-click the Private Market and select Other > Capital Call (V17 R2.46+) Commitment Adjustment/Capital Call (V17 R2.37 - R2.45) or Additional Funding/Capital Call (pre-V17 R2.37). Capital calls increase the funded commitment and decrease the unfunded commitment. Critical fields are described below.

• Entity ID (1163)

• Effective Date (35)

• Settlement Date (37)

• Event Type (55) = LPCALL

• Transaction Name (1728) = Call

• Select Lot (962): populated automatically after the entity and security information are entered

• V17 R2.37+

  • Cash Amount Local (50): enter the local amount of the capital call (must be positive), "in commitment" fees, and/or expense

    • A cash disbursement is created for this amount

    • This increases the Funded Capital (18386) and decreases the Unfunded Commitment (18388)

  • Expense Amount Local (11078): this offsets the impact to cost for expenses that affect the unfunded commitment, but do not hit cost

    • Expense Account Number (1826): specifies the ledger account to which the expense is posted using the PEEXPENSE Code Category

      • Only shown if Expense Amount Local is greater than zero

      • Defaults to 5004000450 (LP EXPENSE)

  • Cost Local (128): calculated as Cash Amount Local - Expense Amount Local

• Pre-V17 R2.37

  • Cost Local (50): enter the local amount of the capital call (must be positive) and/or "in commitment" fees

    • A cash disbursement is created for this amount

    • This increases the Funded Capital (18386) and decreases the Unfunded Commitment (18388)

• Settlement Currency (63): dictates the currency for cash settlement

• Settlement Net Amount (64): becomes unlocked if Settlement Currency differs from Asset Currency

• Transaction Notes (56): values can be added and changed using the PECALLTYPE Code Category

• Original Trade Ticket Number (761)

• Batch Identifier (701): defaults to Original Trade Ticket Number for the purpose of batch canceling trades

Cash Distribution

There are two types of cash distributions:

• Recallable: cash is paid out to investors, but can be either fully or partially recalled at a later date

  • Decreases the funded commitment and increases the unfunded commitment

• Non-Recallable: cash is paid out to investors permanently

  • Does not affect the funded commitment or unfunded commitment

  • These can post as gain, income, and/or relief of cost

This transaction is also used to process expenses/fees that do not impact the funded and unfunded commitments. Right-click the Private Market and select Other > Cash Distribution (V17 R2.46+) or Capitalization/Cash Entry/Final Close (pre-V17 R2.46). Critical fields are described below.

• Entity ID (1163)

• Effective Date (35)

• Settlement Date (37)

• Event Type (55) = LPCASH

• Transaction Name (1728) = Cash

• Select Lot (962): populated automatically after the entity and security information are entered

• Cash Amount Local (50): enter the local amount of the distribution

  • A positive value will create a receipt, while a negative value will create a disbursement

  • A negative value should be used to book any expenses/fees that do not affect the funded commitment, such as "out commitment" fees

• Settlement Currency (63): dictates the currency in which cash will settle

• Settlement Net Amount (64): becomes unlocked if Settlement Currency differs from Asset Currency

  • A positive value will create a receipt, while a negative value will create a disbursement

• Income Amount Local (11076): subtracted from Cash Amount Local for gain/loss calculation

  • Income Account Number (1825): specifies the ledger account to which the income is posted using the PEINCOME Code Category

    • Only shown if Income Amount Local is greater than zero

    • Defaults to 4003000450 (LP INCOME)

• Expense Amount Local (11078): added to Cash Amount Local for gain/loss calculation

  • Expense Account Number (1826): specifies the ledger account to which the expense is posted using the PEEXPENSE Code Category

    • Only shown if Expense Amount Local is greater than zero

    • Defaults to 5004000450 (LP EXPENSE)

• Cost Local (128): added to Cash Amount Local for gain/loss calculation

  • Affects the cost of the Private Market, with a positive value increasing the cost and a negative value decreasing the cost

  • To keep cost in sync with your cash, set this as the inverse of Cash Amount Local (if Cash Amount Local = 2 million, Cost Local = -2 million)

    • This is the inverse of what happens in a capital call, where a cash disbursement causes your cost to go up

• Recallable Capital Local (18390): enter the recallable amount of the cash distribution

  • This amount decreases the Funded Capital (18386) and increases the Unfunded Commitment (18388)

  • Leave as zero for non-recallable cash distributions

• Gain/Loss Amount Local (171) = Cash Amount Local - Income Amount Local + Expense Amount Local + Cost Local

  • Posts to Gain Loss Sec ID L (171)

• Transaction Notes (56): set to CASH DISTRIBUTION, RECALLABLE CAPITAL, TEMP RETURN OF CAP or similar for reporting purposes

  • Values can be added and changed using the PECASHTYPE Code Category

  • You may choose to add a value of OUT COMMITMENT FEES if these are applicable to your investments

• Original Trade Ticket Number (761)

• Batch Identifier (701): defaults to Original Trade Ticket Number for the purpose of batch canceling trades

Net Transactions & Funding Splits (V17 R2.37+)

Private Market data vendors typically break out each statement into distinct transactions rather than netting them together as shown on a PDF. For example, a PDF statement that contains a capital call and a cash distribution with both return of capital and income components would come in as three distinct transactions: a capital call, a return of capital cash distribution, and an income cash distribution. Another example is a funding split, where a capital call that affects the funded/unfunded commitment is accompanied by fees that do not; this would come in as two distinct transactions.

Multiple capital calls and cash distributions can be booked at the same time using Book Trade > Other > Multiple Calls/Cash. This opens a multi-row panel where you can add rows by right-clicking in the lower section of the screen > Add Row(s). Each row is identified as a capital call or cash distribution based on Transaction Name (1728) = Call or Cash. Based on this election, one set of fields from the previous two sections becomes available.

The benefit of this screen is that all transactions share the same Original Trade Ticket Number (761). This value is automatically copied to Batch Identifier (701). Populating Batch Identifier makes it easier to identify groups of transactions and allows you to cancel the whole batch if there is a problem with any one component. Batch Identifier must be populated to use Batch Cancel Trade.

Capitalization

Income and/or expenses can be recognized by processing a capitalization event, which also adjusts the cost of the Private Market. Right-click the Private Market and select Other > Capitalization (V17 R2.46+) or Capitalization/Cash Entry/Final Close (pre-V17 R2.46). These transactions do not generate cash. Critical fields are described below.

• Entity ID (1163)

• Effective Date (35)

• Settlement Date (37)

• Event Type (55) = LPCAP

• Transaction Name (1728) = Capitalization

• Select Lot (962): populated automatically after the entity and security information are entered with the holding created by Initial Funding

• Cash Amount Local (64): locked and defaulted to 0.00

• Income Amount Local (11076)

  • Income Account Number (1825): specifies the ledger account to which the income is posted using the PEINCOME Code Category

    • Only shown if Income Amount Local is greater than zero

    • Defaults to 4003000450 (LP INCOME)

• Expense Amount Local (11078)

  • Expense Account Number (1826): specifies the ledger account to which the expense is posted using the PEEXPENSE Code Category

    • Only shown if Expense Amount Local is greater than zero

    • Defaults to 5004000450 (LP EXPENSE)

• Cost Local (50): locked and defaulted to Income Amount Local - Expense Amount Local + Gain/Loss Amount Local

  • Affects the cost of the Private Market, with a positive value increasing the cost and a negative value decreasing the cost

• Gain/Loss Amount Local (171): can be positive or negative

  • Posts to Gain Loss Sec ID L (171)

• Transaction Notes (56): set to INCOME/EXPENSE or similar for reporting purposes

  • Values can be added and changed using the PECASHTYPE Code Category

Funded/Unfunded Adjustment

Starting in V17 R2.40, you can also use a capitalization event to update the funded commitment without affecting the cost or any other accounting. The result is an equal and opposite effect on the unfunded. This is useful for scenarios where an investor is informed that a portion of the total commitment will never be called because it allows you to increase your funded commitment (and therefore decrease your unfunded commitment) without triggering other activity.

One additional field has been added to the capitalization event. Leave all other fields null and only populate this field to adjust your funded and unfunded commitments without any impact to accounting.

• Funded Commitment Adjustment Local (18386): enter a positive number to increase the funded commitment (and decrease the unfunded), or a negative number to decrease the funded commitment (and increase the unfunded)

  • The field was named Commitment Adjustment Local prior to V17 R2.46

Close

The step is to close out the position. Right-click the Private Market and select Other > Close (V17 R2.46+) or Capitalization/Cash Entry/Final Close (pre-V17 R2.46). Any cash associated with the close can be broken out between income, expense, and cost. Critical fields are described below.

• Entity ID (1163)

• Effective Date (35)

• Settlement Date (37)

• Event Type (55) = LPCLOSE

• Transaction Name (1728) = Close

• Select Lot (962): populated automatically after the entity and security information are entered

• Local Cash Amount (50): enter the local amount of cash to be exchanged

  • A positive value will create a receipt, while a negative value will create a disbursement

• Settlement Currency (63): dictates the currency in which cash will settle

• Settlement Net Amount (64): becomes unlocked if Settlement Currency differs from Asset Currency

  • A positive value will create a receipt, while a negative value will create a disbursement

• Income Amount Local (11076): subtracted from Local Cash Amount for gain/loss calculation

• Expense Amount Local (11078): added to Local Cash Amount for gain/loss calculation

• Cost Local (128): locked and defaulted to the inverse of the current outstanding cost (or amortized cost, if available)

  • Added to Local Cash Amount for gain/loss calculation

• Gain/Loss Amount Local (171) = Cash Amount Local - Income Amount Local + Expense Amount Local + Cost Local

  • Any outstanding cost posts to Gain Loss Sec ID L (171)

• Transaction Notes (56): set to CLOSE or similar for reporting purposes

  • Values can be added and changed using the PECASHTYPE Code Category

Examples

This spreadsheet shows the expected results of typical Private Market lifecycle events: . These examples are simplified such that Cost and Funded Capital are always equal, but this is not a requirement. Cost and Funded Capital can fluctuate independently based on your investment activity.

This spreadsheet shows additional Private Markets lifecycle events, including different methods of booking cash distributions and expenses: . It uses the CSV trade format with an additional row for tag names and an additional column for information about the transactions. See Private Markets Best Practices V17 R2.36+ | Automation for details about processing CSV and EagleML messages.

Conversion

There are two or three options for converting Private Markets depending on your Eagle Accounting release. The optimal method depends on your reporting requirements and the historical data available.

When historical performance analysis is required for the Point in Time method, it is important to consider your entity setup. If each Private Market is held in its own entity, you can load historical fund-level returns and they will represent the security-level returns. You can also load historical security-level returns, but if there are multiple Private Markets in a single entity or they are comingled with other securities, you must load the full history of security-level returns for all of the entity's holdings to ensure accurate fund-level returns.

If historical performance analysis is not required, you can always calculate returns (non-IRR) from conversion date forward without loading historical return data.

Cancel & Rebook

Faulty Private Market transactions must be cancelled using Cancel Capital or Share Based Fund Investments, with the transaction rebooked using the Book Trade module. Private Market transactions are not supported in the Cancel & Rebook Trade process.

• Pre-V17 R2.38: if you need to cancel the Initial Commitment, you must first cancel all subsequent activity

  • It may be preferable to use Delete a Position if you are in a test environment, but this is not recommended in production settings

• V17 R2.38+: Cancel Initial Funding Only can be used to cancel LPOPEN transactions when there is subsequent activity

  • The subsequent activity is rolled back automatically (is it not replayed)

In V17 R2.37+, Batch Cancel Trade can be used to cancel net transactions that were booked using Multiple Calls/Cash.

Accounting

Once an Private Market position is established it will be picked up in Eagle’s global workflow. The following fields will be populated as described below:

• Units (40): always 1.00

• Original Face (41): equal to Commitment (16086)

Valuation

Private Markets use the standard valuation methodology in Accounting and Data Management. They are represented by a single unit/share and should be priced based on market value.

In some cases, market values may only be available on a delayed basis. Beginning in V17 R2.51, price conversion functionality is available to roll forward the most recent market value and adjust it for the net cost impact of any subsequent transactions. See Private Markets Valuation Rollforward Processing Notes for details. In earlier releases, valuations can be restated historically, or the late market value can be entered with a current date.

If Value At Cost - No Price Found = Yes on your entity and you run the STAR to PACE process using Transfer Data - Batch or Transfer Data - Delta with Price Date Switch = Recent, this is the hierarchy that will be used for valuation:

1. Market value loaded for current date

2. Most recent market value available

3. Position cost

Interportfolio Transfers (IPTs)

IPTs are supported for Private Markets using the same functionality as other securities. Prior to V17 R2.40, only the standard accounting fields were maintained on the "to" position (units, cost, MV, etc.). In V17 R2.40+, all applicable fields are available on the "to" position (total/funded/unfunded commitment, capital calls, etc.).

Refer to Manage Portfolio Transfers for details about processing IPTs.

Upgrades

If you are live with Private Markets on an Eagle Accounting release prior to V17 R2.36, you will need to update your existing positions to take advantage of the new functionality. In V17 R2.36 through R2.48, this requires closing out and reconverting the positions as described in the Conversion section. In V17 R2.49 and above, a dedicated maintenance event is available as described in Private Markets Maintenance Event Processing Notes. You can continue trading as usual in the interim, but the position-level fields that are unique to Private Markets will not reflect the correct values.

In addition, a few trade tags were adjusted to introduce new functionality and better align with other security types. Please review any existing automations to see if you need to update the mappings.

Reporting

STAR to PACE (S2P)

The STAR to PACE process creates and/or updates trade and position records in Data Management for each Private Market transaction, and cash activity records are generated for transactions that have cash flows.

• Market value is computed based upon available prices or cost

• Settle Instructions 1-4 (1897-1900) and Settle Location (43) are stored on the adjustment records in Data Management for reporting purposes (V17 R2.38)

The mappings for Private Market-specific fields are provided below.

Accounting Reports

Eagle has a core set of accounting reports that can be used to review Private Market information. These are designed to support the daily operational workflow for business users, allowing Grid Reports to be easily exported to Excel and customized to provide additional details as needed. Advanced Reports are intended to be client-facing and do not provide the same level of customization. Private Market activity is contained mainly in trade and position reports.

New tabs designed specifically for Private Markets were added to the default report profiles for the Trade Activity Report, Holdings Report, and Portfolio Valuation Report in V17 R2.38+. After submitting the report, click the tab that includes Private Equity in its name. These tabs include the fields that are unique to Private Markets, such as total commitment, funded commitment, unfunded commitment, recallable capital, etc.

Data Management Reporting

Performance

The Eagle Performance Toolkit can be utilized for IRR calculations for Private Markets, including Private Market Equivalent - IRR (PME-IRR). Performance analysis fields must be created to support PME-IRR.

• In the case of a conversion, Eagle recommends loading historical market values and cash flows to the performance tables to enable IRR calculations prior to conversion

Note: the cash flow impacts of Private Market transactions occur at different times depending on the type of transaction. For example, LPCALL is a start-of-day flow, while LPCASH is an end-of-day flow. Please review your performance reports closely during testing as these nuances impact the returns.

Automation

Private Market SMFs and trades can be loaded through the standard CSV (V17 R2.39) and EagleML Message Center streams. The SMF must be loaded prior to the trade (trades do not spawn SMFs). Transaction messages are mapped as follows:

Sample messages for the standard interfaces are listed below. The second row of each CSV message contains the tag names; this is for informational purposes only and should be deleted before the message is loaded (or the error can be ignored).