Two years ago KKR launched an app which would enable limited partners to search performance data and receive investment updates. But it never materialized, due to lack of interest from clients, pfm understands.
Now, another firm is trying to provide information to its investors through an app, and hoping the time is right.
Partners Group plans to launch an iPad app, which will allow its LPs to review performance data and explore possible investments.
Technology is becoming “increasingly important in the private equity industry, because of the timeliness and accuracy it can provide, alongside the interaction it can provide between firms and clients,” argues Raymond Schnidrig, chief technology officer at Partners Group.
The app is an extension of the firm’s internal app, which it created three years ago. At press time, the firm planned to launch the app in May, having presented a beta version to its investors during its annual general meeting earlier this year.
Schnidrig expects decision-makers within an LP to use the app to gain a “consolidated, high-end view” on their investments and any new opportunities.
“It has been a big effort on our side to upgrade our back-office capabilities to get us to a level where we can carry out aggregated reporting across all of the investments that clients have with us,” says Schnidrig. “Firms need to be able to aggregate the information across all the funds to come up with the numbers in an automated way.”
Partners Group clients who use the app will be able to find personalized intelligence on portfolio summaries, including sliced and diced performance analysis on their investments. They will also have the option to review activities, performance and investment programs in detail using interactive charts. In addition, investors will be able to download recent investor reporting materials as PDF documents and watch videos about the firm’s latest direct investment opportunities.
Spreading the word
While some firms have the resources to develop their own solutions in house, there are options for those who are considering using technology to communicate with investors and don’t want to build a dedicated app or upgrade their back office.
An example is TopQ, which offers web-based performance tools that allow fund managers and investors to upload spreadsheet-based data about fund performance and cashflows into a standard format and then examine it using analytical tools.
TopQ was set up by former SL Capital founding partners Graeme Faulds and Graham Paterson, and Drake Paulson, previously of fund administrators Vitech Systems Group.
“When I started TopQ I was very much aware that compared to traditional asset classes, the private equity space was very underserved by quality software solutions. And what really struck me was the way that fund managers and investors communicated performance to each other really had not changed throughout my 15 years as an investor,” says Faulds.
Today’s investors want to look further than high-level performance numbers, he adds. They want to understand the key drivers of value within a fund manager’s track record and whether performance has been affected by specific geographies, sectors, or deals.
Faulds says he has noticed an increase in demand from fund managers and investors for access to these sorts of tools through mobile platforms. However, instead of a dedicated app, TopQ was built as a software-as-a-service tool, which enables it to be accessed from any web browser, and it can sit alongside a firm’s existing platforms.
And despite a demand for mobile technology – TopQ has seen a steady increase in usage fo the site on mobile devices – Faulds says technology does not necessarily need to be packaged as an app.
Risking your neck
Using technology to communicate large amounts of private data also comes with its own set of risks. Firms need to think about how they intend to protect client data and ensure cybersecurity.
According to Schnidrig, Partners Group has taken all of the necessary precautions to prepare for a possible cybersecurity breach. “We have done a specific penetration test on the app to make sure that we have all of the gaps closed and to make sure that the client’s data is protected appropriately.”
Private equity firms often use investor portals to relay fund information to investors and Schnidrig says that Partners Group still intends for its investors to use their portal as a tool for more detailed fund information. “The app will give clients access to the most relevant information only. If they want the full history or more detailed data to process in their own systems then they are expected to access the investor portal.”
According to Schnidrig, Partners Group wants to be fully transparent with clients in good times and bad, and an online channel, such as the app, provides investors with the detailed insights into their portfolio they need to be able to make informed decisions.
As increased reporting becomes ever more crucial and better technology means quicker solutions, Partners Group may well be launching the app at the right time. If it is a success, we could see the many across the fund industry adopt this type of reporting.