For private equity funds, data … it’s serious

by bold-lichterman

Since the 2008 financial crisis, regulations governing investment activities have tightened, imposing more transparency on private equity funds. The first effects on the relationship between funds and their investors are felt, according to the EY study “Disruption, a seismic shift in the private equity industry»Published in early April. To carry out this study, EY interviewed 103 private equity funds, and 88 investors (mainly pension funds, financial institutions, and funds of funds).

We learn that in 2015, 45% of investors expect more reporting from private equity funds, i.e. 4 times more than the previous year (they were only 11% in 2014). However, only 40% of private equity funds expect a clear investment strategy, against 64% the previous year.

Data management, a challenge for 63% of private equity professionals

Despite the strengthening of regulations governing this activity, private equity remains one of the preferred products for investors (for 47% of respondents), well ahead of infrastructure (21% of respondents, +11 points compared to 2014), and before real estate (16%, -10 points compared to 2014).

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Not surprisingly, the supervision of private equity funds has increased: the number of funds audited practically doubled between 2013 and 2015 (from 28% of funds to 47% of them).

When asked about their main challenge today, 63% of fund managers say they are faced with the problem of collecting and analyzing the data required for reporting.

Top 5 information requested by investors from the fund

At the same time, investors state that they are generally dissatisfied with the feedback they receive from their partners (44% are not satisfied with the information they obtain following aborted transactions, and 42% regarding the information received during annual meetings).

ey-satisfaction- <a href=https://www.frenchweb.fr/la-liste-des-fonds-dinvestissements> investors </a> “class =” aligncenter size-full wp-image-236839 ″ height = ” 448 ″ src = ”http://www.frenchweb.fr/wp-content/uploads/2016/04/ey-satisfaction-<a href = https: //www.frenchweb.fr/la-liste-des-fonds -dinvestissements> investors </a> .png »width =» 571 ″ /> </p>
<p dir = ltr> The information most often requested by <a href = https: //www.frenchweb.fr/ the-list-of-investment-funds> investors </a> covers the investment teams (at 85%), the conflicts of interest they could face (at 83%), as well as the size of the departments financial (also 83%).  Private equity funds primarily transmit information on their investment teams (80%), the results of regulatory audits (76%) as well as the size of financial services (74%) and conflicts of interest. ‘interest (73%).  </p>
<h2> <b> Funds depending on the skills they already have internally </b> <br /> </h2>
<p dir = ltr> Asked about the way they collect and analyze data, private equity funds prefer spreadsheets, whatever the type of problem to be dealt with (for valuation issues at 68%, to analyze their portfolio at 58%, for risk management at 41%).  It should be noted that only 48% of them use a digital tool to manage their relations with <a href=https://www.frenchweb.fr/la-liste-des-fonds-dinvestissements> investors </a>. </p>
<p dir = ltr> Faced with this need to automate data management to scale up, 59% of private equity professionals rely on the skills of their teams.  Managing relations with <a href=https://www.frenchweb.fr/la-liste-des-fonds-dinvestissements> investors </a> is a good example: a new person is only recruited in 25% of cases to handle these issues.  </p>
<p dir = ltr> How do private equity funds motivate their employees in this context?  They favor 67% salary increases, offer 58% bonuses, and 52% incentive plans.  They are only a third party to offer their employees training, or internal coaching. </p>
<h2> <strong> The obstacles to the implementation of technological solutions </strong> <br /> < / h2> </p>
<p dir = ltr> 61% of private equity funds believe that there is currently no technological solution suited to their data management needs.  </p>
<p dir = ltr> If they had to deploy a technological tool to manage their data, 61% of respondents in the private equity world fear the management of all the data collected by all their employees, and 43% fear a high maintenance cost.  </p>
<p dir = ltr> The <a href=https://www.frenchweb.fr/la-liste-des-fonds-dinvestissements> investors </a>, for their part, would rather be in favor of the fact receive their reports via digital portals (at 87%).  However, only 7% are satisfied with the decisions taken by private equity funds in terms of cybersecurity.  </p>
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* Methodology: EY, in partnership with Private Equity International, interviewed 103 private equity funds and 88 investors, between August and December 2015 across the world. 38% of investors work in pension funds, 29% in financial institutions, 24% in funds of funds, 5% in family offices and 4% in sovereign wealth funds.

SEE the full study:

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