The companies we talk to are discussing building data warehouses on top of existing systems, and having a real time view of their data. Fund managers need to manage their own data correctlyĬFOs have also been telling us that one of the most crucial aspects is having their data stored in the right way. These investors are often coming from a very standardised world – and that level of large-scale standardisation can be difficult for smaller fund managers to deliver, but as one CFO told us: “Investors are expecting the same amount of information on a look-through basis from private equity firms as they would expect to get elsewhere”. Most clients still expect to see quite specific, and sometimes quite nuanced, reporting represented in tailored ways for their consumption. However, on the other hand, it can be challenging for firms to gather data from different sources and present it in a bespoke way to different clients. On the one hand, it is seen as the key to ensuring the industry is able to operate on a level playing field, and regulation is increasing driving the requirement for standardisation. However, for CFOs, the drive towards standardisation appears something of a double-edged sword. Yet while these initiatives are an encouraging step forward, they are not yet embedded across the industry, nor do they fully reflect the increasing needs of the investor base for more standardised reporting. For example, Invest Europe’s Investor Reporting Guidelines demonstrate a commitment to transparency and set out best practice for reporting to investors, while the Institutional Limited Partners Association (ILPA) is dedicated to promoting transparency and aligning the interests of LPs and GPs. There’s been an unequivocal move towards standardised reporting within the private equity sector. As a result, technology must be used by fund managers to overcome that lack of standardisation and deal with ever-increasing demand. Unfortunately, the industry is still some way off standardisation, especially when compared with other asset classes. One CFO called this “not just a hot topic, but life changing”. The drive towards standardisation is still some way offįor most CFOs, their concerns over reporting centre on requirements such as the Sustainable Financial Disclosure Regulations (SFDR) and environment, social and governance (ESG). But now, with increased levels of allocation into alternatives in the last two or three years – particularly from institutional investors – that need for information has sharpened”. As one CFO told us: “Alternative investments such as private equity used to have more room to manoeuvre, by their nature of ‘being different’. While part of this demand has been led by regulatory requirements, GPs believe they are now expected to provide LPs with just as much information on illiquid asset classes as is available from more easily traded assets such as equities and fixed income. LPs expect more data to help them make better investment decisions and to enable them to act nimbly in response to fast-changing market conditions. One indisputable fact recognised by all the CFOs we spoke to is that investor demand for data has increased significantly in the last few years. To drill down deeper into this statistic, we followed up with several CFOs to ask them about how technology is reshaping their operations, and transforming the relationship between General Partners (GPs) and Limited Partners (LPs). In the recent survey Aztec carried out with 100 of Europe’s private equity CFOs and CEOs, 98% told us that the need for new technology, and more efficient operational solutions was being driven directly by investors. Following on from the release of our private equity report Conquering Complexity, Charlotte Light, Chief Technology Officer at the Aztec Group considers the key issues managers face when it comes to meeting client demands for data, and how technology is shaping the future of fund operations.
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