Creating an institutional-grade operating model

How one-stop-shop (OSS) services can meet the needs of private capital fund managers

What does the future hold for private capital fund managers? How can service providers help with the growing burden of regulation and reporting? And how will regulatory change affect the industry?

These were the topics discussed at a recent panel hosted by Intertrust Group in Luxembourg. The event, Private Market Insights: Creating an institutional grade operating model, brought together:

• Ilias Georgopoulos, a board member of the Association of the Luxembourg Fund Industry (ALFI)
• Maxime Aerts, Managing Director and COO at Fundsquare, which provides funds with information and regulatory services
• Venkat Srinivasan, Global Head of Private Funds at Intertrust Group, who runs the private funds business
• Moderator Tony Griffiths, Director of Content at Global Fund Media

These experts discussed operational model transformation and the growing demand for general partners (GPs) to meet the data requirements of limited partners (LPs). The event followed publication of Intertrust Group’s report The future private capital CFO: Unleashing potential in the ESG era.

Private capital CFOs face growing demands from LPs

The report found that private capital CFOs are racing to tackle ever-more complex data and regulatory challenges. In their journey towards greater transparency, the CFOs questioned were looking to one of three solutions:

• outsourcing
• investing in more technology
• hiring more talent

The panel discussed how service providers were developing one-stop-shop (OSS) services to meet these needs.

The report, completed in January 2022, found that demand from LPs for regular data is strong and growing – particularly over portfolio performance, operational service-level agreements (SLAs) and cybersecurity.

It also found that CFOs may be underestimating some investor expectations, with about 40% of LPs seeking “live on demand” data on portfolio performance, but only 30% of CFOs anticipating it. Fund investors recognise that in-house investment and outsourcing can go hand in hand.

OSS services can provide consistent information

The need for GPs to gather, store and distribute data has never been greater. But the report shows that GPs and LPs have very different expectations.

Georgopoulos noted that outsourcing to service providers is being driven by regulation and LPs’ demands for extra data. In turn, GPs turn to “best of breed” for help with data management. 

Aerts described how OSS services can assist fund managers along every step of the value chain and each stage in the entity’s life cycle – from creation, registration and distribution to providing information to regulators and winding up.

He said OSS services could provide a single source of information, ensuring consistency.

OSS services need to offer service range and geographical reach

Srinivasan said that, when choosing a service provider, managers look at the degree to which they offer OSS services and their geographical reach. “These are global managers and they need a presence in different jurisdictions,” he said.

“There are increasing requirements from LPs and these are no longer just about investment or valuation. Instead, they are looking for more analysis and analytics.”

GPs need the right technology to ensure they can customise data and provide the right information as and when regulators and LPs need it, he added.

“Access to information is key,” said Aerts. “Regulatory issues need to be properly handled. GPs are looking for a flexible solution. Live data on demand means different things to the private market than the public market.”

The private and public markets currently have different expectations of data, Srinivasan said. For example, private market data might be issued quarterly or monthly, although there is a trend for LPs to ask for it more frequently and request daily information on cash flow, cash balances and valuations.

“Harmonisation is a keyword,” said Georgopoulos. “A director who moves from fund to fund needs to see the same comparables and the same parameters. Otherwise they cannot judge performance.”

What are the data management challenges for multi-fund managers?

The panel discussed the increasing burden of regulation and the growing threat of fines in different jurisdictions for non-compliance.

Data management presents challenges to asset managers who offer a variety of asset classes – for example, real estate or private debt. While the diverse opportunities in private markets is highly attractive for investors, lack of standardisation is a challenge.

“It is not just about the technology, but how it is all stitched together,” said Srinivasan. “You will have a multi-asset class manager who has investments in all the asset classes. The challenge is how to ensure reporting does not seem disharmonised.”

“How do you bring it all together so the reporting that goes out to the managers and investors is consistent? That is the big challenge with any OSS services provider that has different assets across real estate and private equity, where assets have different life cycles.”

The panel agreed that technology helps speed up the introduction of new products to market, a great advantage for GPs.

“GPs with existing funds are looking to launch new products and they are looking at time to market,” said Srinivasan. “Time to market is critical.”

Georgopoulos agreed: “From a GP point of view, speed to market is very important.”

How Intertrust Group can help with OSS services

Private debt strategies and portfolios can require highly sophisticated models, so managers increasingly need support in areas such as reporting, customisation, IT and due diligence.

Intertrust Group’s tech-enabled, client-centric suite can provide a range of OSS services to help you manage portfolio data and analysis, and provide outsourcing solutions.

Why Intertrust Group?

• Intertrust Group is a publicly listed company with more than 70 years’ experience providing world-class trust and corporate services to clients around the world.
• Intertrust Group provides a wide range of financial and administrative services to clients in the international business environment. We help companies to expand globally, offering support with restructuring, outsourcing and further developments.

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