The PE industry on the brink of broad digitisation
CEPRES: Best Data Management Solutions Provider – The private equity industry is expected to undergo significant changes across its investment processes. This is due to occur both in response to the current crisis and also bearing in mind the broader fundamental shift in capital and returns and systematic risk prior to this global calamity.
“We expect a full digitisation of the investment process for private capital markets with counterparties choosing to act online rather than revert to the old-fashioned approaches. This will be combined with even deeper demands for transactional data exchange to underwrite investment decisions and monitor portfolios based on straight-through-processing,” comments Daniel Schmidt (pictured), Founder and CEO of Fintech firm CEPRES.
The firm notes that, like LPs, GPs have seen massive dislocation in deal underwriting and fundraising in the past months. CEPRES is in place to support broad-based digitalisation across the industry as it offers a new model based on online, digital engagement and interactive investment decisions rather than old fashioned data rooms and reliance on face-to-face personal meetings.
“With over 900 LP-organisations and 1,200 GPs already exchanging transactional data and live content via CEPRES, GPs have a unique opportunity to use a ‘digital presentation channel’ on the CEPRES platform and be proactive and showcase their strategy to manage through the crisis and show LPs how they will protect and recover their capital on the other side,” adds Christopher Godfrey, President, CEPRES US.
Mitigating the impact of the coronavirus crisis is a priority for all in the industry. Schmidt notes the firm is already able to help clients overcome the crisis with online, digital tools enabling LPs and GPs to securely connect and work together ‘live’ without meeting in person and keep investment operations flowing.
“Our unique data and deep analyses of past market cycles are helping investors better understand the risk and opportunities in their portfolios and the market to navigate the crisis and minimise fallout on their investments. They are also able to identify fitting investment opportunities in this ‘new market normal’.” says Godfrey.
In the past years GPs have increasingly struggled to deploy capital that can generate returns with highly competitive and tight deal pipelines. This is now compounded with fallout from the crisis and competition in certain sectors and it is more critical than ever that GPs can make good underwriting decisions with their LPs’ capital.
Godfrey explains that CEPRES has partnered with Bain & Co. to develop unique and compelling deal due diligence tools. These will be based on CEPRES award winning data and analytics and Bain unparalleled understanding of the drivers of success in private equity backed companies.
Outlining trends in the industry, Schmidt notes: “The macro trend of declining interest rates is driving more capital into private markets. However, this is accompanied by a higher demand for LPs and GPs in stronger analytics and high-quality transactional data to underwrite investment decisions and investor portfolios to justify commitments in an environment of decreasing returns and higher macro economical dispersity. As an example, being invested directly or indirectly in thousands of portfolio companies but not knowing the regional and industrial spread of their revenues is not allowing a proper portfolio management under “the new normal” with massive differences of future growth potentials.
“CEPRES is the go-to solution for digital data exchange between GPs & LPs or their administrators combined with tools for deep technical, fundamental and quantitative big data analytics which helped us grow and re-invest in our products to further help our clients.”
Dr Daniel Schmidt
Daniel is the CEO and Founder of CEPRES. He has more than 20 years’ experience in private equity investing and corporate business development.
Before founding CEPRES, Daniel served as Managing Director at Deutsche Bank Private Equity Partners and led the buyout of CEPRES from Deutsche Bank in 2010.
President, CEPRES US
Chris Godfrey is President of CEPRES Corp and responsible for all North American business, Product Management and Marketing functions globally. Chris has 18 years of experience in the private markets industry. His career is focused on driving change in finance through transformational technology.