Differentiated support in view of changing needs
ACA Group: Best Regulatory & Compliance Firm – Fundraising is expected to increase in the second half of 2021 into 2022 and as private equity firms face challenges on various dimensions, support that blends practical and regulatory advice is becoming critical.
“Despite the early economic impact of the pandemic and the inevitable pressures felt by the PE industry both at a firm and portfolio company level, the industry has emerged relatively unscathed and appears well positioned as the global economies continue to rebound. We’ve already seen a sharp increase in deal-making as firms return to previously shelved transactions,” outlines Adam Palmer Partner at leading global governance, risk and compliance advisor, ACA Group (ACA).
With the historic lines between PE and other industries continuing to blur, ACA has blended its knowledge of market practices from across the financial sector (hedge funds, direct lending funds, securitisations, illiquid markets, public markets) to provide a service that covers all possibilities, while retaining a practical commercial approach for PE firms.
Palmer discusses the trends currently driving the private equity (PE) market: “We have seen an expansion of strategies due to early pandemic impact on the economy, such as quickly raised distressed/special situations funds or more targeted sector focused pools of capital. These expansions have led to a greater emphasis on conflicts of interest and MNPI considerations.
“Firms have also expanded their universe of investment opportunities within existing strategies across the capital structure, in accordance with contractual obligations, to include loans and bonds which in turn bring their own information barrier considerations and reporting requirements.”
In addition, throughout 2020, PE firms carried out focused reviews of portfolio companies and their specific needs. Palmer explains: “This requires consultants to dive deeper into the structures of investment vehicles providing a greater level of practical advice and support on governance issues across the portfolios rather than simply advising on the implementation of EU wide directives and regulations.”
ACA Group’s response has been to build a service offering that blends practical and regulatory advice, to take into account far more strategic and operational considerations. “This has, in turn, developed a more nuanced approach for our clients, incorporating firm specific processes while also adjusting for wider market trends and best practices as appropriate,” Palmer notes.
And as the fundraising drive continues, ACA is positioned to support clients with its marketing review offering. This aims to take the time-consuming strain of reviewing multiple strategy and investment decks from in-house compliance teams via the firm’s managed services.
PE firms also face numerous regulatory change challenges, namely new, prudential compliance rules and the transition away from LIBOR. In addition, Palmer says: “We also see some signs that regulators are, once again, casting a gaze across the entire private markets space and questions have been asked, albeit quietly, about the way individuals are selected when taking on board seats.
“Time will tell if this does actually signal the start of a deeper look at the market but with an emphasis on governance structures in the UK post the Senior Managers and Certification Regime, it cannot be discounted, and we are monitoring the situation closely.”
Adam Palmer, Partner, ACA Group
Adam Palmer is a Partner with ACA Group and leads the UK Regulatory Practice. He maintains a portfolio of clients and manages a team of consultants providing Financial Conduct Authority (“FCA”) and US Securities and Exchange Commission compliance support to UK-regulated companies. These firms include hedge and traditional long-only managers, private equity companies, venture capitalist firms and MiFID investment firms. Immediately prior to joining ACA, Adam worked for the Permal Fund of Funds Group. While there, he focused primarily on the company’s UK, Dubai, Hong Kong, and Singapore regulatory requirements. Before Permal, Adam served as Vice President, Legal and Compliance, for Centaurus Capital, a European event-driven hedge fund.