Canoe goes beyond fund-level data extraction

Offering will give LPs – including those who act as GPs of secondaries funds and fund of funds – and fund administrators asset-level data.

Canoe Intelligence is enhancing its automated data extraction capabilities with software that lets it go beyond funds and into portfolio companies.

The service provider rolled out its latest product this month, called Canoe Asset Data, after getting feedback from 13 existing customers to shape it.

Aman Soni, vice president of data strategy at the firm, told Private Funds CFO that the product is geared towards LPs – including those that are GPs for secondaries and fund of funds – fund administrators and consultants working on LPs’ behalf.

An overview

The deeper offering builds on Canoe’s data extraction expertise.

“Canoe Asset Data works off the same documents that we are already extracting from,” Soni said. “Nothing is different in that lens. We are just applying technology in a different way to identify different data points.”

He added that these data points include a fund’s underlying investments, their valuations and their “static data points” such as industry and geography.

Canoe uses AI for its data extraction technology, Soni said. And he noted that the asset-level data extraction is supported by new models that the company made.

Canoe Asset Data follows two existing products for data gathering and extraction.

One is called Canoe Connect, which Soni said is used for “automated ingestion” of GP documents that are designated for LPs, such as capital calls and annual reports. He explained that Canoe gets permission from its customers to upload the documents, obtaining them from GP channels such as data rooms and portals.

Soni said that once these documents are uploaded, their metadata is standardized so that they are assigned common names for the same terms that vary between funds.

The other product is, like the company itself, called Canoe Intelligence, and is used for fund-level data gathering.

A myriad of uses

Soni outlined how Canoe Asset Data can be used in a slew of ways for investment monitoring.

One of these is for risk management by mapping out potential headwinds.

“Investors basically want to understand their running exposure, and that might be by sector, by geography. It might be by industry,” he said. “It could be a number of different factors, but they want be able to model that, not just across their private market exposure, but also their publics.”

Customers can also use the data product to improve their own reporting of investments and related exposures.

“We found that a lot of clients wanted to be able to report to their boards, trustees, or other related parties about asset-level transactions – so where are they actually investing in – and then associated exposure reporting, which is also relevant,” Soni said.

A similar case use is for regulatory reporting – Soni pointed to the SEC’s private funds rule and Solvency II for insurers in Europe as two examples.

Additionally, he said that LPs can use Canoe Asset Data as part of their due diligence of funds – and for monitoring their existing investments’ financials.

The product makes this monitoring more expeditious.

Extraction is meant to speed up the work of finding key financial metrics and trends. Soni cited EBITDA as an example, noting that locating it isn’t easy.

“EBITDA specifically is a numerical number, but it can be found in bodies of text, typically within a quarterly or a financial document – sometimes in update reports as well – but it’s text-based, it’s hard to find,” he noted.

And standardizing terms can help to uncover new insights.

“That really helps the investment teams largely be able to understand what’s going on in the market from a trend perspective,” Soni said.

He also noted that customers can use a feature in the product called “transaction attribution,” which helps them to keep track of their pro rata ownership of portfolio companies. These pro rata positions can change as time goes on.

“There may be investors who enter later on in the lifecycle of a fund,” Soni explained. “There may be different tax treatments.”

Investors are interested in pro rata ownership so they can get exposure details at the asset level, Soni explained. He added that LPs can use their data to decide whether to rebalance their portfolios.