Outsourcing SPV management is increasingly vital due to their increasing complexity. U.K. and European managers prioritize technology, geographic presence, and compliance when choosing partners, with technology being crucial for efficiency and risk mitigation.
Special purpose vehicles (SPVs) have long been mainstream structures at the center of a mature global investment ecosystem. As the complexity of establishing, managing, and effectively utilizing SPVs has grown in an increasingly complicated world, so too has the importance of outsourcing.
In early 2024, CSC canvassed the views of 400 senior private markets professionals in the U.K., Europe, North America, and Asia Pacific on a range of industry subjects, including the role that outsourcing plays in managing SPVs and optimizing transactions. We used the research to inform our report SPV Global Outlook 2024: Charting the Course for Growth in Private Markets.
What are the top benefits of outsourcing?
Almost a third (31%) of U.K. and European respondents said the use of SPVs continues to increase because there are more outsourced solutions to expedite the set-up process.
The fact that U.K. and European managers have multiple entities spread across European jurisdictions—particularly in the aftermath of Brexit—is driving demand for robust outsourced solutions, which can reduce the resources needed to manage SPVs and mitigate financial and reputational risk.
It’s important to consider the differences between available solutions and select the right platform for a particular firm’s needs. So, what do U.K. and European private fund managers look for when choosing an outsourcing partner?
How private fund managers choose the right outsourcing partner
According to our research, the key criteria for U.K. and European private fund managers when identifying a partner include a sophisticated technology platform (66%); geographic presence (66%); reputation (64%); technology and reporting data (61%); and breadth of service offering (55%).
Two thirds of respondents (66%) in the U.K. and Europe said “regulatory/compliance services (e.g. FATCA, CRS, DAC6, UBO registrations)” were critical to outsource to corporate administrators. This was higher than in North America.
Respondents said other SPV services that are critical to outsource to corporate administrators include:
- 75%—corporate secretarial services
- 68%—cash management/payment support services
- 67%—monthly/quarterly/annual accounting/reporting services
- 67%—directorship services
How important is technology in outsourcing partnerships?
Our research shows that technology remains a fundamental aspect of outsourcing partnerships. Technology can automate previously manual processes, reducing friction and errors, maximizing resources, and improving user experiences.
It can also help firms standardize processes across jurisdictions, given nuances in legal and regulatory regimes, making management and reporting across SPV portfolios more straightforward.
Having a sophisticated technology platform came out strongly as a critical capability that private markets professionals look for in outsourcing partners. Some of this comes down to the need for greater data analytics and data management.
When asked where they would like technology solutions to deliver specific improvements, U.K., and European respondents identified the following three areas:
- 58%—form and entity management systems
- 55%—centralized portal for a single view of all SPVs
- 52%—efficient reconciliation of bank accounts
How can CSC help?
SPV management is becoming increasingly complex, and technology plays a critical role in simplifying these challenges. A sophisticated platform can automate processes, provide a single dashboard overview, and ensure consistency across jurisdictions, making SPV management more efficient and transparent.
When selecting an outsourcing partner, managers should prioritize firms with the right technological capabilities, alongside a global presence and years of experience. These elements not only help manage SPVs effectively but also enable fund managers to fully leverage their advantages, including ringfencing assets, protecting liabilities, and optimizing portfolio diversification.
The globalization of the SPV market, combined with the increasing complexity of underlying vehicles, underscores the need for a comprehensive solution from a single partner, one that is equipped with the technology and expertise to streamline SPV management across multiple jurisdictions.
CSC offers a global solution that meets all the requirements of fund managers establishing and managing SPVs. Above all, we are a one-stop shop, eliminating the need for multiple outsourcing partners.
Interested in finding out more? Download SPV Global Outlook 2024: Charting the Course for Growth in Private Markets.
