Technology has long played a central role in how financial institutions remain competitive, manage risks, and stay on top of a complex, dynamic industry.
This is particularly true with regard to how they use and optimize the special purpose vehicles (SPVs) fundamental to their business.
Over the past five years, a rapidly evolving global regulatory environment, demand for enhanced reporting and ever-more granular data, and new themes such as ESG have combined to create a much more sophisticated environment as well as additional risk for managers. Managing SPVs has become more complex and more challenging.
When compliance becomes a competitive advantage
In the first quarter of 2024, CSC surveyed 400 senior private market professionals in Europe, North America, and Asia Pacific on a range of industry subjects, particularly the use of special purpose vehicles (SPVs) in optimizing transactions.
A key takeaway from the research was that as the use of SPVs grows and management becomes more complicated, technology is widely seen as a means to better manage SPV portfolios and act as a competitive advantage for those who harness it effectively.
CSC has sought to develop and utilize the very best technologies for our clients as a means to meet regulatory and reporting requirements, so this was a compelling and encouraging insight.
A centralized portal for all SPVs
Our research asked about the areas of their operational processes and SPV management that investment professionals would like technology to improve.
Real asset fund managers told us the top three areas are a centralized portal for a single view of all SPVs (cited by 57%), efficient reconciliation of bank accounts (52%), and setup and maintenance of entity management systems (52%).
The top three areas where private market respondents want technology to deliver improvements to SPV management were a centralized portal for a single view of all SPVs (59%), cash management function (50%), and efficient reconciliation of bank accounts (48%).
Regionally, there were also clear similarities, with the primary focus for respondents located in North America, the U.K., and Europe, and Asia Pacific being the development of a centralized portal for a single view of all SPVs or effective entity management systems.
Outsourcing in an increasingly complex market
For many fund managers, outsourcing has played a critical role in how their organization and compliance and legal teams manage SPVs. Unsurprisingly, the role of outsourcing in an increasingly complex market is getting deeper.
Significantly, modern technology platforms mean solutions such as a centralized portal and a single view of all SPVs, efficient reconciliation of bank accounts, and regulatory compliance are already available.
Moreover, they can all be managed in one place and handled by one partner as long as they have the right platform.
Optimize SPV administration with CSC’s global solutions
Our research found that most respondents (excluding those who handle SPV administration in-house) currently use two outsourcing partners. However, according to our research, this number is expected to grow in the next five years, with respondents anticipating expansion to three or more outsourcing partners.
In our experience, this is most likely due to people unwittingly committing to a network of local providers put in place to facilitate local markets or ad hoc, last-minute needs.
Today, outsourcing can be handled by a single trusted partner with a global network, appropriate technology, and years of experience managing SPVs effectively across jurisdictions. CSC provides truly global coverage and an unparalleled suite of solutions for our clients, supported by best-in-class technology.
We are a one-stop shop that eliminates the need for multiple outsourcing partners.
Interested in finding out more? Download and read our latest SPV Global Outlook 2024 report.
