Private equity firms including Kohlberg Kravis Roberts, HarbourVest Partners and Coller Capital have joined forces with LPs and fund service providers to standardize formats used in the transfer of data between parties within the industry.
The non-profit consortium, dubbed AltExchange Alliance, will use tailored XML taxonomies (a defined set of rules for encoding documents) to create a uniform format for private equity players to send and receive data.
A major problem facing the industry has been how to effectively process ever increasing volumes of data in recent years, said in a statement Johnny Randel, chief financial officer of StepStone and AltExchange founding member.
“Firms have been spending considerable time and resources manually re-keying and reconciling information and less time analyzing data, said Randel. “Having the transfer of data automated and having agreed upon industry-defined data standards will help address this significant inefficiency.”
Having the transfer of data automated and having agreed upon industry-defined data standards will help address this significant inefficiency
In an interview with PE Manager, fellow AltExchange founding member and eFront chief operating officer Stuart Keeler, noted the group's efforts will allow GPs to produce a single investor data package that can be used for all LPs.
“That way investors aren’t receiving 200 different files in different formats, but rather a single file format they can deal with efficiently,” he said.
The standard will be updated on an ongoing basis to keep pace with the changing industry, according to a source familiar with the matter.
Another benefit of a standardized data exchange is that firms will be able to save time on supplementary information requests from investors, HarbourVest chief financial officer and fellow founding member, Karin Lagerlund, told PE Manager.
“A key objective of common standards is that managers will be able to produce responses to requests from investors more efficiently,” Lagerlund added.
AltExchange, which already has more than 30 members consisting of GPs, LPs, fund of funds and fund administrators, expects the standard to be ready to use by mid-Summer.
Those interested in joining AltExchange can complete an online membership application by clicking here. Membership costs $1,000 per year.