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Private capital CFOs say timely, accurate data is becoming a must in Western Europe

3 March 2022

Barbara Martin

Head of Private Funds Sales, EMEA

Barbara Martin

Head of Private Funds Sales, EMEA

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Private capital CFOs in Western Europe face increasing demands for data from regulators and investors. Meanwhile their role is changing as they take more strategic decisions within their organisation

The role of CFOs today is not the same as 20 years ago. In the coming decade, CFOs will need to be able to use data in more varied ways and become nimbler. Up-to-date and accurate data will become a must, not a plus.

To understand more about the changes in the market, Intertrust Group conducted research with Global Custodian to ask chief financial officers (CFOs) at private capital funds what industry trends they are witnessing. The report, The future private capital CFO: Unleashing potential in the ESG era, delves into data demands private capital CFOs anticipate from their investors in the years ahead.

A key challenge for CFOs is collating and analysing data, especially from multiple sources. Ideally, everything should come from a single source – pulling data from different databases or spreadsheets can be inefficient and create errors. Accurate data improves the quality of reporting and mitigates risk.

Fundraising climate bright for private capital CFOs in Western Europe

The report found that the fund-raising climate overall is showing signs of improvement, with real estate, private debt and infrastructure fund-raising predicted to improve significantly over the next two years.

Overall, a third of private capital CFOs in Western Europe anticipate significant improvements in infrastructure fundraising, followed by 30% for real estate, 24% for growth equity, 25% for buyouts and 18% for venture capital.

Real estate, private debt and infrastructure fundraising are all also expected to pick up in the next two years. This bodes well for post-pandemic recovery.

Over the next two years, 49% of private capital CFOs in Western Europe are planning to diversify into growth equity – already the dominant sector with 48% of respondents currently active in it. Additionally, 42% of CFOs said they would seek to diversify into buyouts, followed by infrastructure (36%) and venture capital (34%).

Importance of live updates on cybersecurity

Private capital CFOs in Western Europe anticipate increasing demand for live data on a range of functions in the coming decade. 33% said they expected limited partners (LPs) to demand daily portfolio performance information.

Cybersecurity was perceived to top LP’s concerns, with a third of CFOs expecting demands for live updates by the end of the decade. This compared with 17% expecting demands for live updates on operations.

There are a lot of conversations on how to safeguard data as cybersecurity becomes a top priority. In terms of portfolio performance, LPs want more data more frequently.

This is the approaching reality for 2022 and onwards. Investors want to see live portfolio performance and be kept informed of changes hour to hour.

Demand for environmental, social and corporate governance (ESG) data and Diversity & Inclusion data is also growing. In the next decade, 26% of private capital CFOs in Western Europe anticipate having to supply daily ESG updates and 30% expect to have to provide similar regular information on Diversity & Inclusion.

Overall, 70% of CFOs said gender diversity played a crucial or important role in assessing an investment opportunity and 78% had an ESG policy in place, compared with 84% globally.

The survey also found 96% of CFOs said that LP expectations on ESG were very or moderately important. The figures for the same were similar globally (96%) and in the UK (95%).

Outsourcing needs will grow for private capital CFOs in Western Europe

Providing live updates on portfolio performance is becoming crucial to business. CFOs’ futures depend on keeping investors informed. This is likely to bring increased need for third-party assistance in processing and analysing data.

Over the next three years, 24% of private capital CFOs in Western Europe expect to complement the skill sets of their in-house finance team by seeking outsourced expertise in tax. Overall, 23% will outsource accounting functions and 19% technology, with 17% looking to third-party help with investor relations and 16% with operations.

Outsourcing enables CFOs to concentrate on core tasks such as portfolio management and sourcing deals, rather than having to spend time on data collection.

Download the full report now

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