Private capital markets must adopt a standard taxonomy for data reporting if they are to benefit from increased investor appetite.
This is the finding of a report issued by KPMG UK that spoke to global asset allocators and investors.
The study, ‘Improving data exchange fluidity between LPs and GPs’ was conducted in partnership with the Private Capital Data Standards Alliance.
It found that legacy data structures and the absence of standardised data are not only making it harder for firms to meet their reporting requirements, but also affecting the ability to draw valuable insights from the data.
“There is an incredible appetite from institutional investors to increase allocation to private assets, including private debt, infrastructure, real estate and private equity,” said Zeynep Meric-Smith, partner and head of private assets consulting at KPMG.
“Yet there is an opportunity cost here because of laborious legacy processes and technology that hinder insight-led decision making that could otherwise support better investment allocations.
“The message we received is clear – there must be far greater consistency in the data needed for reporting,” added Meric-Smith. “For us, that means the industry’s priority should be in creating a common language – a standard set of data requirements and definitions of those data points.”
The issue of taxonomy and data standards is not limited to private capital. The ESG sector has also raised similar concerns about a lack of data standards.
The report surveyed allocators in Europe, North America and Asia with a total of more than €1 trillion assets under management.
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