Ocorian, a specialist fund administrator that recently predicted a swathe of alternative investment fund managers (AIFMs) would change their outsourced fund administration providers, said it had gained 40 new clients in the last year.
The firm said it saw a 10% increase in onboarding as part of what it calls a “surge” in AIFMs changing providers.
Ocorian previously found 23% of managers were looking to change fund administration providers over the next 18 months.
The firm also said it believed a similar trend could occur in the coming years for AIFM’s to change their ‘AIFM’ provider. An AIFM provider is usually a fund administrator that provides the regulated entity – the AIFM, or “ManCo” – for a fund issuer on an outsourced basis.
Thomas Fahl, head of AIFM at Ocorian, said the rise in outsourcing changes was across all private asset classes, with managers stating that the incumbent AIFM providers did not have the required specialist asset class knowledge in the areas such as private equity or real estate.
“Third-party AIFM providers have historically been seen as more of a long-term relationship. Fund initiators were often viewed as more likely to switch fund administrators…but stay with their AIFM provider over the longer term.
“However, we’re seeing a mindset shift with clients more likely to ask for an RFP during the relationship and every week we are having conversations with clients who are looking to switch.”
Communication problems and due diligence mistakes are the biggest issues for AIFMs when they switch administration providers, the firm’s research found.
Where firms switch their AIFM provider, effective data transfer is essential, the research identified. If the relationship with the existing AIFM has broken down, the initiator of the fund has to ensure the incoming AIFM has access to all the data they need, and managers may need to secure additional support to ensure a smooth transfer, Ocorian said.
Ocorian commissioned independent research company PureProfile to interview 100 alternative fund managers in the UK, US, France, Germany, Netherlands, Sweden, Switzerland, Finland and Norway during April 2023.
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