LP demands around investor reporting are intensifying and those demands are only going to increase, according to global head of fund sales at Intertrust Jonathan White. “This is where we are investing, to provide sophisticated transparency tools for our clients,” he says.
“We are seeing a demand for increased accessibility, transparency, granularity and frequency of reporting,” adds Alex De Santo, group head of private equity at Crestbridge.
“New reporting metrics are being requested, for example around ESG. Leveraging technology to support increased LP demands is critical to ensuring operational efficiency and minimizing additional costs.”
Certainly, the tech requirements surrounding the aggregation and communication of data are substantial. LPs want the ability to delve into different kinds of information on their own terms. They require access to an ever-wider range of data points, and the timeliness and manner in which they demand to receive them are changing too.
Interrogating the data
In the early days of formal fund administration, quarterly financials were distributed via email. Gradually, providers began to enrich reporting with dashboards and visuals. Now investors are demanding real time access through interactive portals so they can interrogate raw data.
The next step is for systems to be integrated across the capital flow. Investors have historically had to manually input the data they are given. Dynamically connecting data from underlying portfolio companies to GPs, and ultimately LPs, would be a leap forward in efficiency, and a few administrators are now moving in that direction.
On the subject of efficiency, LPs are increasingly interested in the advantages of automation. There has also been a drive for more standardized reporting, says James Duffield, head of business development at Aztec. He cites the ongoing Adopting Data Standards initiative, a collaboration of private capital stakeholders advocating for efficiency and consistency in digital reporting. “How successful that will prove to be, we shall see,” Duffield says.
What is clear is that growing complexity and technological requirements are fueling an outsourcing trend.
Elaine Chim, head of private equity for America and Asia-Pacific at Apex Group, says that along with reporting requirements, the scrutiny and disclosure burden has also increased in recent years.
“An external administrator can add an extra layer of oversight,” she says. “Furthermore, an outsourced administrator can put dedicated teams in place to specialize in a plethora of other value-added services over and above pure fund administration… while leveraging experience from working with other clients.”