Market forces support outsourcing trend in PE
Centaur Fund Services US: Best Fund Administrator (GP’s with assets <USD30bn) – As fund administration complexity and regulatory burdens grow, technology is playing an increasingly critical role in the fund administration process. General partners (GPs) can reap the benefits of third-party systems without the cost and time associated with implementing and maintaining these systems in-house. This allows investors to have real-time access to reporting through portals where they can view data at any time, across multiple investment structures in multiple jurisdictions with complete transparency.
The coronavirus has been the single most influential event this year and has understandably had a significant impact on the private equity industry. Technology is playing a key role in how GPs are adapting to these pressures.
Des Johnson, CEO of Centaur USA comments: “GPs have traditionally relied heavily on face to face interactions in an industry that has always been quite conservative. With the technology developments and acceptance that has come with the lockdown, GPs are quickly realising technology is a support to them as they adapt and modernise. New technology tools and security protocols are bringing about greater productivity and cost efficiencies. This has, in turn, led to an upswing in the outsourcing of administration operations.”
He explains that in the current environment, Centaur has been proactive in keeping funds connected with their investors and advisors: “This can be done in many ways, such as hosting virtual board rooms as well as delivering accurate and timely reporting. Digital collaboration is also on the up. With virtual messaging and document sharing tools, GPs, LPs, fund administrators and other parties are collaborating like never before.
“Fund administrators need to offer immediacy, personalisation and transparency, all on an accessible and secure platform. However, person-based client service should never be compromised and should work with technology to provide advice and assistance based on experience. At Centaur, we have the technology platform to fully support our PE clients. We also get on the phone with clients and walk them through best practice, how we have seen others resolve issues, what we saw in prior crises etc.”
The pace of change in technology is considerable and keeping abreast of these developments and incorporating them into their business is one of the key challenges GPs are grappling with. Johnson outlines: “GPs need to embrace new technologies. Data is now produced and accessed in real time, so GPs need to offer their investors personalised, up to date, transparent information on an accessible and secure platform. With rising in-house costs and increased regulation, GPs are increasingly turning to outsourced service providers as a viable strategic decision. This can enable them to enjoy the benefits of best-in-class technology without the time and cost associated with in-house systems.”
In addition to cost and regulation, increasing market pressure on GPs to deliver accurate reporting with greater transparency is also driving the outsourcing trend. Johnson concludes: “Investors are demanding operational excellence from their funds and are increasingly demanding third party administration. When you add increased regulation, operational risk and a once-in-a-century global pandemic to this scenario, you can see the logic of outsourcing these functions to an external provider with specialist skills and the inevitability that outsourcing is where this market is moving.”
CEO/Partner, Centaur Fund Services US
Des Johnson is based in New York. Des has grown the business significantly over the last few years and Centaur now has over 150 people across 9 offices administering over USD35N in assets. Prior to joining Centaur Des was Managing Director and Global Co-Head of Investor Services at SS&C. Des has experienced all aspects of the Investment fund Industry since 1998 working in Ireland, Bermuda and New York. Des has held senior management positions at Citibank, BISYS and IFS/State Street. Des has a BA (Hons) in Business from Dublin Business School.