Chief operating officer and chief compliance officer, Braemont Capital
Ashley Belton Gold
Partner, Simpson Thacher & Bartlett
Finance director, Park Square Capital
Director of finance, Quona Capital
What first attracted you to working in-house in the private funds market?
Steve Sims: The ability to help build a business from the ground up. Braemont launched its first fund, and it is exciting to be a part of something new and growing.
Ashley Belton Gold: As a fund finance lawyer, I have the opportunity to work on cutting-edge financial products that help define the market. My fund sponsor clients are endlessly innovative and constantly coming up with new fund structures and ideas. It’s never boring.
Matthew Maguire: I was first attracted to working in private credit, and specifically at Park Square, given the growth prospects of the asset class and the stability of its investment returns. This was coupled with a high-caliber and dynamic team who matched my own ambitions!
Maryna Higgins: I found my path to private funds in an unconventional way. As an immigrant, I began my professional career in the US working for a construction consulting firm while completing my finance degree. Upon graduation, I had the opportunity to work for a global non-profit impact investment manager, where I was part of the in-house accounting team. I found that I really enjoyed the exposure to all aspects of funds and investments, and I have been working in this field ever since.
What advice would you give to someone just starting out in this industry?
SS: It is crucial to network with others in the field. Even within finance, we are in a very niche industry with unique aspects other CFO/COOs don’t encounter. Your peers can be the best sources of information.
ABG: Input equals output, so you have to put the work in. Find a mentor or someone you think you can learn from and cultivate that relationship. Listen and don’t be afraid to stick your neck out, ask questions and volunteer.
MM: My advice would be to ask lots of questions and absorb as much knowledge as possible from your colleagues in the early days. Starting out in private credit is a bit like learning a new language – there will be lots of acronyms, financial metrics, technical standards and new terms to learn as you get up the curve.
MH: I would suggest that people try to get as much exposure as they can to the many aspects involved in running a private fund. Once this comprehensive understanding is achieved, they’ll be in a better position to gravitate to the elements they most enjoy and become expert in those.
What business issues keep you awake at night?
SS: Turnover at service providers. Over the past couple of years there have been increased departures at many service providers. Firms that can figure out consistent retention have a major advantage going forward.
ABG: The issues are ever-changing, which is emblematic of the current legal landscape of the fund finance market.
I am constantly thinking through a number of legal issues (such as, managing my clients’ liability exposure, structuring trends, local law and regulatory issues, etc).
MM: It’s not issues per se that keep me awake at night but more the need to continually evolve and innovate in order to keep up with the growth of the business, expanding regulatory environment and increasing sophistication of LP data needs. There is always a long list of ambitions and projects to complete but that is part of what makes the role so rewarding.
MH: We’re always working to stay up to speed on the ever-evolving regulatory environment of the private funds market. As a global firm, Quona has to stay on top of requirements of many jurisdictions across the globe and keeping up can be overwhelming at times. But that’s part of the fun!
What do you think is the most outdated thing about the way in which in-house teams at private funds currently operate?
SS: That teams are only “finance” or “operations.” CFO/COOs need to ensure they understand the investment process from sourcing to close. A better understanding bridges the gap between the finance and investment teams, allowing for one cohesive unit.
MM: Using both financial and non-financial data to drive strategic as well as investment decision-making represents a massive opportunity to add value and drive outperformance. However, a data led approach requires data from various sources to be identified and aggregated in order to be used most effectively. I believe investing in data strategy and having best in class systems will be integral to ensure finance teams do not become outdated.
MH: The most outdated thing about many in-house teams is their lack of technology, or their use of outdated technology. At some funds, far too many processes are still very manual and time consuming. While no software will solve all of the problems, using technology to eliminate 80 percent of the manual process work can create space for additional analysis and value-add activities.
What single recent market development do you think will have the biggest impact on the role of the CFO/internal finance team over the next 12 months?
SS: The Securities and Exchange Commission’s enhanced focus on the way firms market and operate will have the biggest impact on CFO’s and finance teams. Ensuring compliance with the new and evolving regulatory landscape will be a significant task.
ABG: I think many finance teams will have their hands full with the recent uptick we’re seeing in net asset value facilities, including with respect to the initial structuring and diligence and ongoing accounting and maintenance obligations.
MM: We have seen a material increase in base rates as well as rising costs in 2022, which is putting pressure on the free cashflow of leveraged portfolio companies and their ability to service debt. Robust portfolio monitoring and forward-looking analysis will remain critical in identifying risks early and ensuring the portfolio remains healthy, allowing us to be front-footed on new investment opportunities.
MH: Post-covid talent retention will be critical. Enrollments for accounting degrees seem to be going down, and many accounting professionals are switching to consulting jobs. CFOs will need to be able to keep their teams motivated and engaged while managing the high costs of turnover and additional inflation pressures.
And, of course, ESG is now front and center for most funds, and many will be looking to CFOs to lead the efforts of reporting and compliance with current and future regulations.