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How to Succeed in a Demanding Private Equity Environment

28th Dec 2020

Fund managers face multiple pressures, including raising and retaining capital, finding appropriate investment opportunities, and generating returns that exceed investor expectations. To succeed, they need to keep abreast with the swift currents roiling the industry — including investor demands for greater transparency and ever-growing reporting complexity — without disrupting their primary objective of managing the investment portfolio. In the world of private equity management, changes happen fast, and solutions need to keep pace. That’s where fund technology comes into play.

“Ultimately, what all fund managers need is the confidence and flexibility to run their businesses the way they see fit, and the blend of technology and client services that JTC offers as a third-party fund administrator provides them with the strong foundation they need to maximize their strategic advantage at an especially complex time in private equity management,” said JTC Group’s Wouter Plantenga, ICS Head of Group Client Services, who also shared the top seven benefits of outsourcing private equity managers need to take into consideration.

“Outsourced solutions are often regarded as expensive, but when you compare the cost vs. doing the work in house, there are frequently cost factors that are either a) underestimated or b) not even taken into account…it all adds to the cost of being self-administered. The discussion around this being a fund expense versus a management company expense is highly relevant, especially in a time where limited partners are putting pressure on margins and fees.”

Wouter also added that “investors are demanding more transparency, and many want to know which systems are being used. Spreadsheets are no longer sufficient; specialized accounting systems have become truly essential in our industry. But specialized systems can be very expensive, not only due to vendor cost, but also to support, maintenance and training. The cost can easily outweigh the benefit of buying the fund administration technology yourself. However, administrators are able to handle these technology platforms at scale — while maintaining cost at a minimum. It is better to select an administrator that doesn’t use off-the-shelf technology at all, but one who has developed their own purpose-built solutions.”

JTC’s Private Equity Fund Administration solution utilizes a uniquely scalable technology platform with built-in compliance, data security, automated reporting and enhanced transparency, which in turn yields greater efficiency, reduced operational risk and higher investor confidence, all of which free up time to focus on raising capital and making prudent investments.

Investors will also have 24/7 access to fund status, capital account financial data and document sharing through our online portal — decreasing the number of customized reporting requests that fund managers need to develop.

“JTC has proven that it is able to use technology and industry expertise to assist our clients and help solve some of the challenges they face,” added Michael Richards, Head of Fund Administration USA. “Our technology-focused approach to private equity resonates with our clients, who see value in being able to simultaneously manage multiple databases and feeds, calculate valuations, make data-driven decisions, and employ augmented and artificial intelligence applications, but who would rather not develop those technical competencies in house.”

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