Using data on the road to digitalisation
RFA: Best Technology Infrastructure Provider – Private equity is seeing considerable interest from institutional investors hunting for return. Although the pandemic has impacted valuations, it has also triggered the potential for opportunity creation and caused a shift in the type of investments being made. As the sector moves to broader digitalisation, PE managers are also using big data in a more proactive manner.
“Assets under management in private equity have continued to grow from strength to strength off the back of exceptional performance. Institutional investors – a number of whom are struggling to generate decent returns because of the unprecedented low interest rates and general market volatility – have observed how well private equity strategies are doing, and are piling in, often by re-allocating away from other alternative asset classes such as hedge funds and real estate,” George Ralph (pictured), managing director, RFA, points out, “admittedly, Covid-19 has impacted portfolio valuations, but it is also prompting more private equity managers to move away from leveraged buy-outs and instead make investments into credit or distressed debt.”
Ralph notes that although Covid-19 is creating all sorts of problems for the industry, private equity has weathered the storm reasonably well. He comments: “One of the challenges the industry is facing revolves around dry powder. As so much capital has entered into private equity, some managers are struggling to find ways to put it to work.
“Other private equity firms – while increasing their AUM quickly and significantly – are finding it hard to scale up their operational processes. This is an area where RFA can provide support.”
The rise of digitalisation and the increased use of data sits at the core of the service RFA can offer clients. Ralph remarks: “Financial institutions have recognised the power that data can harness. In the case of private equity, big data is being used more proactively to shape investments and implement organisational changes.
“We fully expect more private equity firms to be making use of big data in order to drive business-wide improvements. Our role is to help facilitate their digital journey. We do this through our global managed data services product, which supports data warehousing, ingestion and analytics; all of which are fully protected by our award-winning security platform designed for fund managers.”
Private equity managers also need to adapt to the new working environment. Ralph believes business as usual is unlikely to return anytime soon in the next 12 to 18 months, meaning remote working practices are poised to be the new normal for some time yet. “In order to thrive during these extremely difficult times, private equity managers need to put digitalisation at the core of everything they do, whether it be investor reporting or client engagement. By utilising technology intelligently, private equity firms will be able to flourish during this crisis, and beyond,” he advises.
In addition to the focus on digitalisation Ralph points out that managers are dealing with growing regulatory and client reporting requirements: “With investors unable to conduct physical meetings because of social distancing rules, the volume of institutional client reporting requests has jumped exponentially. In order to meet investor demands, private equity firms need to have in place robust systems to accurately compile the data, process the information and then distribute the reports in a way that is accessible for end investors. To carry out this role effectively, private equity firms must ensure that they have good quality data and excellent technology systems to process it.”
Managing Director, RFA
George Ralph CITP, has successfully founded three technology firms along with C-level advisory services include M&A to numerous firms. George is a true leader and has been managing teams internationally, and leading technology transformation projects for over 20 years. A certified GDPR, Cyber assessor, Auditor, Architect and widely experienced cybersecurity and RegTech professional, George has extensive technical experience in network and server architecture, large scale migrations utilising leading technology brands, and IaaS offerings.