Over the next three years, 55% of general partners (GPs) and 64% of limited partners (LPs) anticipate on-demand or daily portfolio performance reporting to become “normal” over the next three years, according to a study.
The Future of Private Capital 2023 report by CSC, a global business administration and compliance solutions provider, revealed insights into the evolving expectations of GPs and LPs in the private capital market.
20% of GPs surveyed said they expect live updates. Furthermore, some 44% of GPs expect live or daily updates on NAV deadlines, with 58% on cyber security issues such as data breaches and 43% for broad ESG reporting.
60% of LPs expect live or daily reporting on operational SLAs, such as NAV deadlines, while 67% expect it on cyber security issues, such as data breaches. Additionally, almost half (48%) anticipate live or daily reporting for ESG matters. Specifically for ESG, 58% expect daily or live information on portfolio company diversity and inclusion policies to become standard over the next three years.
Amidst operational complexities, both GPs (32%) and LPs (34%) anticipate the continued growth of “technology-led outsourcing models” to manage reporting demands efficiently.
47% of GPs said they plan “significant” geographic expansion to seize growth opportunities. Additionally, nearly half (49%) aim to increase the use of fund credit facilities, and 43% intend to expand hybrid or interval funds.
In response to rising complexity, 26% of GPs plan technology framework investments. LPs highlight the importance of self-service functionality, with 89% stating it positively influences their opinion of fund GPs.
“Our study reinforces a widespread industry focus on data capture, analytics and more granular reporting levels,” commented David Sarfas, co-head of fund solutions at CSC. “This will only add to the funds’ operational burden, necessitating more investment in technology and building deeper relationships with service partners.”
Outsourcing offers cost flexibility for operations and serves as a means to fortify a fund’s technology stack affordably, as “unrestricted data flows are crucial to scalable operations”, he added.
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