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Jersey investors demand data, but different sectors need different metrics

1 April 2021

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Investors want in-depth numbers, not anecdotal evidence about their assets’ performance. We learn more about the private capital landscape in Jersey from two of our local experts, Chris Patton, Head of Private Equity and Philip Hendy, Head of Real Estate.

Demand for data is growing enormously as investors increasingly expect timely, comprehensive insights into their holdings.

This expectation was revealed in our recent survey of 300 private capital chief financial officers (CFOs) from around the world (in partnership with Global Custodian).* But these requirements vary between sectors – in Jersey real estate and private equity in particular want different data and metrics.

Most CFOs in the survey emphasised the need for lots of live data. But while this may be a requirement for hedge funds, it is perhaps less realistic for private equity and real estate assets, where valuations of underlying holdings tend to be done on a quarterly basis.

Even if the value of investments has changed only slightly from the previous quarter, investors expect to see what has affected the performance of each asset.

For example, in a basket of ten assets, some may have risen in value while others have fallen. But why? And, more importantly, are there any trends? Is a particular asset class falling out of favour, so likely to generate worsening returns? Are market-beating returns down to the fund manager’s sharp management skills?

Anecdotal evidence vs analytical data

Once real estate investors relied on anecdotal evidence from managers combined with sector benchmarks. Now they are keener to see the actual numbers behind performance.

Many of our private equity and real estate clients in Jersey are investing in software to help them keep better track of portfolio company valuation data. And as well as financial metrics, they increasingly want details about diversity and ESG. This is a developing trend but one that’s becoming increasingly clear – our survey found respondents in Western Europe expected deeper engagement with ESG as well as diversity and inclusion from their LPs.

Real estate isn’t an environmentally friendly asset class, so there has been a push in recent years to improve its credentials through recycling buildings, minimising environmental impact and improving energy efficiencies. But it’s difficult to get a good benchmark for the sector.

In reality, no one has yet figured out exactly what data is needed. Over the course of this year, we expect more clarity to emerge over the data we will need to report as standard in the future.

Intertrust Group’s flexible, best-in-class systems and network of international specialists are able to collate all this data, integrate it quickly and efficiently for clients who may struggle to do this in-house with limited resources.

A bridge between the UK and the EU

As the European Union and the UK move further apart following Brexit, the UK’s financial regulatory regime is likely to diverge over the next two or three years. This puts Jersey in an important position.

Any fund managers willing to set up a UK-regulated fund now risk the regulatory and political landscape becoming fundamentally different during its life cycle.

Jersey provides a good middle ground between the UK and the EU, with access to both markets. At the same time, its regulatory framework has been in place for several years ahead of Brexit.

Jersey is also working hard to raise its own ESG profile. “Green products” it may offer in the near future would be likely to be tied to strict compliance metrics. Investors in such funds could be reassured that their investments would need to withstand rigorous scrutiny, ensuring there has been no “greenwashing”.

How Intertrust Group can help private equity and real estate

  • Real estate accounting services
  • Fund accounting and reporting services
  • Domiciliation and management
  • Investor services

Download the report

*Source: Global Custodian in partnership with Intertrust Group; a global sample of 300+ chief financial officers at private capital funds were surveyed between 20 November 2020 and 26 January 2021, including 88 in the US.