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How proactive partnerships drive private capital fund innovation

13 December 2021

Andrew Maiden

Fund Services Director, Guernsey

Andrew Maiden

Fund Services Director, Guernsey

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Working with a proactive partner can ensure capital funds can capitalise on transformative tech – and help generate new and effective solutions

Our report, The future of fund technology, shows that about three-quarters of fund managers use third-party administrators (TPAs) to help service their funds.

However, finding a proactive partner is strategically critical. Just as every business is different, so is every fund and fund manager. The essence of a productive relationship is whether a service provider can implement bespoke solutions to support the day-to-day activities of a fund. A one-size-fits-all approach is inappropriate and proactive service providers can add value for fund managers in a way that also drives innovation.

For a service to be fit for purpose, the provider must listen to and understand the client. And that depends on the human interactions that underpin all good businesses.

Innovative tech solutions evolve from strong partnerships

New, efficient ways of working can evolve from relationships between TPAs and fund managers. Introducing new technologies to tackle specific tasks and processes lies at the heart of this. The most time-consuming, complex or repetitive tasks are usually those where technology can make the most difference.

As deal flow and reporting demands become ever more complex, well-aligned technology can assist proficient management of corporate actions including:

  • Investing
  • Due diligence and capital calls
  • Portfolio accounting
  • Divesting
  • Onboarding, including investor research and know-your-customer (KYC)/anti-money laundering (AML) processes

A successful approach will bring specific benefits (such as improving how a particular task is performed) and also general benefits (such as making business more efficient or improving investor and employee satisfaction).

But although funds are likely to have a clear idea of how technology could improve their work, exactly how that will look in their own setting is probably less obvious.

For instance, a fund manager may underestimate the possibilities of automation and machine learning or overestimate the impact of blockchain and Big Data applications. A knowledgeable and experienced service provider will see opportunities for all these technologies in the right areas. Fine-tuning technology requires an attentive TPA.

The importance of human interactions

A good service provider must understand a fund manager’s needs and explain where value can be added.

Real-life, hands-on demonstrations of key activities and systems using the client’s own data are fundamental. When it’s done well, clients should be able to see output based on their own understanding of the fund, which then allows for iterative tweaking.

Technology is at the core of Intertrust Group’s overall strategy. Our vision is for a single universal platform standardising delivery across all business lines and jurisdictions, enabling clients to mine data and make faster, better decisions.

Areas of focus include:

  • Big Data
  • Machine learning
  • Blockchain
  • Robotic process automation (RPA)

In all of these, fund managers need partners who focus on the real impact of technology – as a preferred alternative to regaling clients with the supposed wonders of the latest hyped technology in abstract “blue sky” terms.

Addressing reporting demands frees up staff time

Quantifying the benefits of new technology is highly beneficial. Automating the most time-consuming tasks frees staff for more rewarding work, such as attracting investor funds and deal-making.

Enhanced data management will help fund operations run more effectively. Data analytics, live dashboards and cloud-based data control are now essential for fund managers pushed by increased reporting demands.

The demand from investors for greater transparency in reporting, combined with the sheer volume of deal-making all underline the need for accurate, timely information. Even powerful tools such as Excel are limited for tackling complicated calculations such as multiple carried interest and earnings per share calculations based on bespoke waterfalls and investment performance.

But getting implementation right is a human-centred process. Relationships developed over time between individuals working at administrators, technology partners, prime brokers, regulatory agencies and so on, are crucial.

Meeting new challenges proactively: ESG solutions

A final area is data gathering and analytics around environmental, social and governance (ESG). Private capital firms struggle to access robust ESG data, making it difficult to meet stringent demands for collecting, storing, benchmarking and analysis.

But ESG provides a good example of how our partnerships with fund managers drive innovation. Our innovative end-to-end data solutions include an inter-jurisdictional solution to help clients meet ongoing ESG demands and understand what their global client base needs.

A successful proactive partnership starts with communication. Dialogue about value-adding activities is key, as is spending time on day-to-day issues.

Ideally, feedback on routine services will be minimal, with more focus on improving future performance. Of course, there will be service-level agreements in place, and these fulfil a function, but day-to-day contact and developing personal relationships at all levels is fundamental.

Why Intertrust Group?

  • As a strategic proactive partner, we provide a holistic, full-spectrum bespoke service throughout the lifecycle of a private capital fund.
  • Our proprietary innovative technologies combine with global knowledge and experience to deliver added-value services as reporting demands grow.
  • Expert teams harness cutting-edge technologies that will eliminate costly errors.
  • We work with funds of all sizes to deliver bespoke solutions to all administration requirements allowing the fund and its partners to concentrate on investor relations, fundraising, closing deals and profitable exits.

Download the report