PE Tech Report

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Majority of PE firms see technology as a value-creation lever

The overwhelming majority (96%) of private equity firms believe that technology is a “value-creation lever” and can add value throughout the investment lifecycle, although the industry remains overly reliant on manual systems and processes, according to a new survey from investor services group IQ-EQ.

Some 93% of respondents ranked technology transformation as one of their top three business priorities over the coming 12 to 24 months.

The survey drew on around 30 senior executives, with more than two-thirds of those surveyed managing more than $1bn AUM, IQ-EQ said. 

According to the survey, some 82% of firms still employ manual tools in their operations and, despite advances in technology and artificial intelligence, are still dependent on data spreadsheets and legacy tools for data collection, reporting and onboarding.

Given the rising digital expectations from LPs, firms are looking to develop in-house data platforms to consolidate data and drive better investment decisions.

According to the survey, over 60% of respondents already use an in-house data platform and reported improved operational efficiencies in timesaving (82%), enhanced data quality (76%) and quicker information provision (64%).

Meanwhile, 76% of those already using an in-house platform are contemplating outsourcing this service to a provider to reduce compliance risk and ensure scalability, according to the survey.

Investment in data warehouses was a high priority for respondents, with 46% either having or currently implementing an in-house data warehouse.

In a press statement, Vera Huang, Head of Data Integration Programs, Asset Owner Solutions at IQ-EQ, said that the report showed “promising signs that firms are looking to revamp their technology stack and channel much-needed investment into data platforms”.

She added: “These platforms are a crucial next step to alleviate the administrative burden on fund managers, giving them time to focus on more strategic, value-adding activities.”

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