Putting managers in control of their data
With private equity enjoying a surge in interest among institutional investors keen to seek out longer-term yield away from traditional asset classes, the opportunities for fund administrators to provide outsourced services are compelling.
UMB Fund Services, and other fund administrators, are seeking ways to tap in to the market and encourage more PERE managers to outsource some of their in-house functions, without fear of losing control of their processes or data, and without concern that the administrator in question cannot provide adequate customisation.
As Jill Calton (pictured), SVP and Director of Alternative Investment Operations confirms, over the past 12 months, “we’ve seen tremendous growth in the private equity space with a number of large managers launching funds on an annual basis”.
“A significant portion of our growth in 2017 was in single manager private equity funds with additional growth in multi-manager and direct PE, real estate and direct lending funds,” adds Calton.
Compared to Europe, outsourcing still has a way to go in the US, with conservative estimates ranging from 40 to 50 per cent.
But as Calton points out, there has to be something that drives PE groups to outsource, “because if it’s working and investors are satisfied with the in-house delivery of reporting and accounting, why change? Why take that leap?”
“Whether it be regulation or demand from their underlying institutional investors, these tend to be reasons for why managers decide to outsource. There is a lot of opportunity in the market for us to win new business but much of that rests on continued demand from investors.”
“We are working to identify the concerns that PERE firms might have with respect to outsourcing and in our view it comes down to offering customisation and giving managers control.
“We work with many private equity clients and no two are alike. When it comes to outsourcing they want to know that the structure they’ve built and operated will fit on to an administrator’s platform. Can they get detailed, bespoke reporting? More importantly, they want to know that we will treat them as a unique fund manager and provide a truly customised service,” explains Calton.
PERE managers want reassurances they are not giving up their data and losing control over the data, which historically they’ve held closely.
To address this, UMB Fund Services has built extensive technology enhanced by a robust web portal and mobile app in order to give general partners real-time access to that data, which they can manipulate and work with in a way that best suits them. Being able to have online access and use different applications is key to accessing that data quickly and efficiently.
“They can pull that data from our platform at any time in order to do analysis. That helps managers feel as though they still have control of their fund data and investor information,” adds Calton.
“We are seeing a greater demand for customised data feeds to internal platforms and broker/dealer platforms and have the technology that can automate and streamline that process.”
Calton concludes: “We do customised programming for each client, if needed. We have a model that can be tailored to the unique nature of each fund while leveraging existing technology development that already supports managers’ most common needs.”