The report, based on a survey of 119 private equity executives in the United States, Europe and Asia, finds that data management is a growing concern in areas including investment decisions, investor reporting, operational efficiency and regulatory compliance.
For instance, 70 percent of respondents said it is important to provide access to interactive investor reporting, even though only 23 percent of participants currently have the capability to do so, according to market research firm Tabb Group and the vendor SunGard Data Systems Inc.
At the same time, the balance of power in investment partnerships has largely shifted to the limited partners, while regulatory compliance requirements have increased, the report finds. Jason Haft, an author of the report and principal consultant for Investran, SunGard’s asset management business, said buyout firms often maintain disparate systems to provide reporting to investors, to maintain their own internal ledgers for each fund and to meet newly required regulatory compliance.
“Regulators are looking for information that crosses all three platforms. Pulling together that information is not just an exercise of combining data but combining teams as well,” Haft said. Reports may need to pull information from investor relations and accounting as well as compliance, he said, a degree of integration that was not contemplated even a few years ago.
“A couple of years ago none of this was on anybody’s radar,” Haft said. “Today it’s the full alphabet soup of regulations.”
At the same time, limited partners, which themselves are adopting more complex portfolio management systems, are calling for fund managers to provide information that they can integrate with their own systems to make investment decisions.
“Limited partners who are investing in these funds are much more sophisticated now than they were five years ago,” Haft said. “Demands on the general partners are growing because you have more investors who are looking for specialized schedules, specialized reports, different views of the information you are providing.”
Perhaps unsurprisingly for a vendor with a product to promote, Haft argued in favor of a holistic strategy to meet multiple goals. “To make this part of business as usual is going to be of critical concern,” he said. The same systems that improve investor reporting or regulatory compliance also can deliver improvements to operational efficiency within the firm and better visibility into portfolio companies through better integration, he said. “Ultimately the goal is to improve your decision-making process. That’s where the benefit is going to lie.”
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