Who’s in your Top Ten? – LP demands push decile rankings
Deciles and quartile …
A global perspective on private investment operations and opportunities is essential. In this article, eFront offers an international view of issues and trends relevant to the alternative investment market with dispatches from around the world from three of our business unit leaders.
by Tarek Chouman, COO Asia & Middle East, eFront
This complex region contains market participants that vary widely in terms of their maturity. A powerful trend for all players is the emergence of electronic data exchanges, enabling GPs and LPs to capture investment data through online data portals in order to avoid time- and labor-intensive manual data entry.
What is interesting is in this trend is not the need simply to capture and provide more data. Enabling investors to intelligently analyze the more detailed performance data – with sophisticated analytics solutions – is where the real value is derived.
A second trend is occurring in China, where there is a booming market fueled by a flood of money. However, the Chinese managers are relatively new to the game and would like to readily adopt best practice and expertise rather than build it over decades.
Thus, their expectation is that business solutions provide more than just a technology platform. The solutions that will be the most successful in this region will provide clients with great technology in addition to built-in expertise and best practices.
A third but lesser trend is that Chinese managers are looking for all of their business functions – from deal flow to other processes – to run on the same platform. Similar to the other regions, this poses an opportunity for solution providers who provide integrated products to facilitate multiple business processes.
by Eric Bernstein, COO North America, eFront
The growing demand for additional transparency is definitely present in the North American market. In particular, LPs are looking for more data from their GPs, including better metrics for underlying investments. And on the GP side, there is growing demand for straight-through processing. They want to take large amounts of data, scrub it and send it out to their LPs without interruption, ideally using a single system.
There is a parallel trend with LPs who are also seeking to move from multiple best-of-breed solutions toward single, integrated solutions.
Although the international market is heavily weighted toward the U.S., the events in the Eurozone are having an impact in North America. I’m seeing some investment strategies and fund raising efforts shifting from focusing on European markets to emerging markets including Eastern Europe, Africa, and some smaller regions in Asia. This particular activity, however, still seems to be rather small.
by Philippe Verboogen, COO Continental Europe, eFront
Although the European private equity markets are quite active and strong, Europe continues to be a challenging environment for fund raising due, at least partially, to the on-going Eurozone financial crises. Traditional investors, including banks and insurance companies, are very cautious.
In keeping with what seems to be a global trend, there is growing pressure to provide greater visibility regarding performance by both LPs and GPs. In this region, there is great opportunity for solutions that improve transparency and communication between these parties.
I’m also seeing considerable momentum in private equity in the Nordic countries including Norway, Finland, Denmark and Sweden.
And, the French national election may have an impact in the alternatives industry in Europe. The first round of voting went to the Socialist candidate, François Hollande, who has pointed directly to private equity as a key target for reform.
This result could become a material concern. However, many investors already have considered this outcome as a possibility and have taken steps to lessen their dependency upon French assets. For instance, many European fundraisers are looking beyond European borders to Asia for new opportunities.