Newly-launched AltResources is to provide private equity (PE) funds with accounting, tax, and compliance services.
The firm is led by founder and managing director John Wiencek, who was previously managing director and head of North American operations for Mourant Fund Services, a leading fund administrator that was acquired by State Street in 2010. The AltResources team includes highly knowledgeable individuals with experience in accounting, tax, law, finance and asset management.
"Managers of private equity funds want to focus on what they do best – finding investments and managing portfolios," says Wiencek. "Record-keeping, regulatory compliance and tax paperwork are not their core competence, but they are for us. With an experienced staff and excellent technology infrastructure, AltResources is equipped to handle the growing administrative needs of PE funds."
AltResources has begun introducing its service to selected PE funds and expects to announce its first client engagements by year-end. "Based on our modeling, we believe we can achieve savings of 20 per cent for an established PE fund with assets of less than USD500 million compared to their in-house process, and for fund startups the savings from outsourcing are even greater," Wiencek says.
Executives in private equity recognise the growing burden of regulatory compliance. In a recent survey by KPMG of private equity industry executives, 51 per cent of those surveyed said complying with new regulatory standards is a "difficult, time-consuming process," up from 43 per cent a year earlier.
"With increased regulation on the horizon, many PE fund managers will turn to third-party providers for compliance services," says Howard Kirschner, director of tax services for AltResources. "The days of relying on one person and an excel spreadsheet are over." Kirschner, who has over 30 years of tax experience, previously held senior roles at The Blackstone Group and Weil, Gotshal & Manges.
Investors also are driving the trend toward outsourced fund administration. "Investors are demanding a much higher level of assurance about the quality, timeliness and reliability of PE fund reporting," says Nicholas Schiavo, director of accounting for AltResources. "That’s why we believe outsourcing these functions will become a growing trend among PE firms. The risk-management benefits and favorable economics make outsourcing too compelling to ignore."
Fund administration today is dominated by a handful of large, global banks, but they have underserviced the private equity segment, particularly funds with less than USD1 billion in assets.
"We believe the turmoil in the banking industry has created an opening for an independent firm that can focus on client needs, particularly funds of moderate size, and can offer a customised approach instead of a standard menu of services and pricing," Wiencek says. "We are very optimistic about the outlook for this industry – and for our business."
