Asian private equity investors seek ever more data

In a growing private equity market dominated by institutional asset managers, family offices and high net worth individuals, a demand for daily data is natural – but is it necessary?

One of the most striking statistics from Intertrust Group’s 2022 Future Private Capital CFO report is that 77% of limited partners (LPs) say they would like to have performance reports on a daily basis, minimum.

Given the rather glacial pace of portfolio changes with many private equity funds, this appears, at first glance, a surprising standpoint.

However, it rings true for private equity in Asia for a number of reasons.

Private equity investors in Asia desire control

Private equity in Asia differs to the US or Europe. The industry is in a much more embryonic phase.

As a result, investors crave the information that might help them understand this new model of investing in the region. Quite naturally, they are looking for regular reassurance, peace of mind and some semblance of control.

This is compounded by the conservative nature of private equity investors in Asia, where investments through the decades are dominated by family offices and high net worth individuals.

Those who have committed generational wealth to private investments are naturally keen for regular updates on performance and operational efficiency.

As a region with high digital consumption rates, where real-time information and instant access are the norm, private equity investors in Asia see no reason not to expect such a frequent flow of data.

A dynamic regulatory landscape for private equity in Asia

At the same time, regulatory focus on private capital in Asia is increasing as authorities grapple with the sector boom. As yet, this has not transformed into demands for more reporting, but funds and investors are aware that increased scrutiny – regarding environmental, social and governance issues (ESG), for example – is coming.

Then there is the sense that private capital in Asia is evolving in the midst of a series of global crises. In today’s global marketplace, investors are well aware that shocks in one region cause tremors that could keenly reverberate around the world.

In such circumstances, an intense focus on having the latest data and reporting to hand can be seen as entirely sensible to navigate threats and opportunities. Investors want to understand their financial exposures, both on a fund level and on their portfolio positions, quickly. This desire for regular information is evidence of a sector attempting to build nimbleness into systems and processes from the ground up.

Is private capital in Asia making a good use of resources?

There is, however, a potential disconnect between what investors want and what funds can support.

The demand for ever-more frequent data comes at a cost to fund managers, who will often need extra personnel and resources to collect and validate it.

Given the inherent illiquidity of private equity investments, anything beyond quarterly reporting can impact efficiency and takes precious time away from investor relations or deal-making.

Most limited partners (LPs) will understand this. Their desire for daily reporting is probably an ideal-world scenario, rather than a cast-iron requirement.

Perhaps what LPs are really asking for, rather than daily reporting, is easy access to data whenever they want to see it. This is partly so they can reassure their own investors that this information is freely available.

The situation is fluid, because the ideal operational model for private equity in Asia is still being worked out.

Growing demands for data are clearly based on real need, but there is a compromise to be reached around the depth and frequency of reporting – one that finds a balance between need and cost, and takes the strategies of individual funds into account.

In all these areas, an experienced global outsourcer such as Intertrust Group can help. We enable fund administrators to meet evolving expectations around data and reporting, bringing LPs a level of comfort that reflects the attitudes of their investor base.

Why Intertrust Group?

• As a strategic partner, we offer a full-spectrum service tailored to meet all back-office needs throughout the lifecycle of a private capital fund.
• Our proprietary innovative technologies are combined with global knowledge and experience to deliver added-value services catering for all asset classes, while increasing manager visibility of portfolios on behalf of a fund’s investors.
• Our expert teams harness tools and cutting-edge technologies to eliminate costly errors in the handling of fund administration and corporate actions, investor relations and portfolio management.
• Intertrust Group is a publicly listed company with 70 years’ experience in providing world-class trust and corporate services to clients around the world.

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