Ludovic Legrand is the head of the asset servicing market for the EMEA region at eFront, a leading software solutions provider for the alternative investment industry.
What’s the best way to optimize data exchanges between GPs, LPs and fund administrators?
Traditionally this has been a significant challenge for the private equity industry, largely due to the lack of formalized market best practice to manage non-homogeneous data in a consistent manner. However, the private equity market has really evolved in recent years to meet investor expectations. One example is the increasing adoption of Institutional Limited Partners Association templates and guidelines, particularly on calls and distributions, capital account statements and fees. This helped push market best practices to a much higher level.
The most advanced fund administrators already offer a client portal such as eFront Investment Café to their clients. Populated by a rich data set, portals allow fund administrators and GPs to provide timely, quality data so that LPs can drill down into their portfolio. Via dashboards that have filtering functions to enable the export of custom data sets, portals provide an excellent way to optimise data exchanges and offer added-value solutions to all stakeholders.
How can LPs conduct value-added risk and performance analysis?
We find many LPs want to conduct proper risk and performance analysis, but this usually remains wishful thinking. In their defence, historically, a number of elements prevented LPs from conducting in-depth analysis that really added value. The accessibility to quality raw data was one of them.
In fact many GPs continue to periodically send their investor reporting in PDF format, thereby still making it difficult and labour intensive to access the raw data. The granularity and consistency of data that LPs can get varies significantly from one GP to another.
In response, GPs have considerably increased their investment in technology in recent years. Today, the vast majority of GPs offer access to their PDF reporting through an investor portal, and the most advanced GPs understand that LPs are also expecting to interrogate this reporting dynamically by allowing LPs to drill down into their portfolio data through dashboarding and custom reporting functionalities. Furthermore, LPs are also looking to export this data to feed their own centralized reporting systems, to conduct in-depth analysis such as cashflow forecasting, performance contribution and Value at Risk.