Regulation, politics and investor relations are just some of the issues that Sanjay Sanghoee, chief operating officer and CFO at Delos Capital, says he will be watching out for in 2019.
Delos Capital, based in New York, is a lower mid-market private equity firm that raised $250 million for its first fund.
What are your top concerns heading into next year?
Sanjay Sanghoee: I would say the top concern is the political climate. Stability in the political climate is healthy for the economy, it’s healthy for business and it allows investors to plan out their cycle of investments.
As a fund manager, stability allows us to provide more visibility to our investors about the timing of acquisitions, the timing of exits and the approximate value at which those acquisitions or exits will be made.
I think the business community would like to see more stability in the political sphere here in the US.
Will you be facing more responsibilities for your work in 2019, and will you be outsourcing more?
SS: The COO/CFO role over time has been evolving dramatically in private equity. You have to start looking beyond the core work in terms of strategy, team management, investments, expectations of investors and a variety of other things, so my responsibility will definitely continue to grow next year.
In terms of outsourcing, we already use a good outside fund administrator, tax team, lawyers, and a compliance consultant, which is increasingly common in private equity.
I see outsourcing becoming more prevalent in the industry because it is actually more cost-effective and time-saving, and frankly even safer for a lot of funds to outsource critical functions to experts – safer in the sense that it is comforting for investors to have a third party checking the fund’s work.
Are there any regulatory challenges to watch for next year?
SS: I think the SEC does spend a lot of time talking to fund managers and to investors, which is a great thing. I think there’s a lot more co-operation between the two sides so that funds can get it right from the get-go.
There’s actually a healthier environment today in the regulatory space. There’s a sense on both sides that the idea is to improve how we do business and that requires close co-operation between the authorities and fund managers.
I could absolutely see that co-operation continuing next year. It’s been a healthy trend. I think everyone benefits from it.
What do you hope to accomplish next year?
SS: One thing I always strive for year after year is improving reporting to our investors and ensuring that we’re being responsive to their needs.
COOs and CFOs that I know from other funds are also extremely focused on investor reporting and meeting their responsibilities to their investors. And investors themselves are demanding more on the reporting side and general results.
They expect a lot more transparency about what’s going on with the portfolio companies and with fees and expenses.
California will be implementing its data privacy law in 2020. Is your firm preparing for that next year?
SS: It’s not something we’ve focused on yet. We’ll definitely take a look, however, and do anything we need to.
Are there any staff changes planned for next year?
SS: We are likely to hire one associate sometime next year and are in the process of meeting potential candidates.