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Rising to the transparency challenge with tech

21 June 2022

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When covid hit global markets in early 2020, investors around the globe wanted to know their exposure – they clamored for instant access to data on their holdings to understand how every portfolio asset would be impacted by lockdowns.

Fast forward to February 2022, and it was real-time data on exposures to Russia and Ukraine that were under the spotlight. Again, LPs did not just want to know about the funds they were invested in, but to understand the portfolio companies and their links to the impacted region. Throw rapidly intensifying ESG scrutiny into the mix – both at a GP and asset level – and managers are finding themselves under excruciating pressure to deliver insights they have never before been expected to provide.

“Private equity investments are rather illiquid, and now the majority of LPs want either daily or live performance data, which is not necessarily a match for the asset class,” says Jeffrey Drinkwater, senior director of fund sales at Intertrust Group. “Fund managers can give that, but in truth those assets aren’t seeing a whole bunch of change on a daily basis. Then there is the same demand for real-time data on ESG across the portfolio. Managers are in desperate need right now; they know they have to deliver this transparency for LPs, so they have to find a solution.”

Drinkwater also says ESG is extremely time-consuming for managers, but “it is the number one issue on their list. To win new business, they have to show they are on top of their game. The vast majority of managers understand they need a tech solution, but it’s not going to be easy to get that data flow from the underlying portfolio companies up to LPs and new investors.”

Read more from Jeff Drinkwater on Private Equity Wire, here: