Fund Administration Process Outsourcing for Private Equity, Real Estate and Hedge Funds-Explained!!

Fund Administration Process Outsourcing for Private Equity, Real Estate and Hedge Funds-Explained!!

For the majority of Private Equity and Real Estate firms, the fund administration process is largely in-house. There is an increasing trend of outsourcing fund administration processes by General Partners like Hedge Funds, Private Equity, Real Estate and Venture Capital funds. Outsourcing fund administration process has several advantages. At the same time, however, keeping the process of fund administration in-house has several disadvantages. Some of these are:

High Costs: Hiring specialist professionals with expertise in Fund Administration is a costly affair. Managing a team on-site is even costlier. Outsourcing some of the mundane functions can save up to 30-50% of costs related to the fund administration process

Lack of expertise: There are multiple complications involved in structuring a fund and then reporting the development afterward like new investments made, valuation of the portfolio assets, and exiting the assets. It’s difficult to get professionals who know it all and even if they are there, its overly expensive

Primitive Investor Relations Process: Mostly when the fund administration process is kept in-house it lacks innovation. There is no automated tool to report the fund performance to LPs. Systems of reporting are archaic with excel sheets and newsletters still being used excessively

Further financing rounds: LPs increasingly are preferring GPs who rely on third parties for fund administration process as that brings in an unbiased view of operations to them

Dilution of focus from the core objectives: A PE firms’ focus should ideally be looking into the operations of portfolio companies, streamlining them and finding out buyers for them and certainly not getting mired with day to day reimbursements, accounting, rental follow-ups and valuations

Scalability: As the in-house team is fixed, there are scalability issues. There are lots of documents that are to be studied during an investment and exit whereas the workload tapers in normal day to day operations. It can’t be scaled up or down as per the project or fund requirements

Lack of automation opportunities: A specialist outsourcing player brings in lots of automation opportunities as that firm is working with multiple other Private Equity or Real Estate firms on similar issues. Automation is not possible in-house as there is a lack of automation know-how in-house.

Regulatory compliances change much often: Depending on the countries where the fund is listed and the countries where the investments are made, there are a plethora of regulatory compliances that need to be followed. It is a cumbersome and time-consuming task and is prone to faults. This impacts the speed at which the fund should move

 

If you agree with the nature of the problems stated above and are looking for a solution, please read on. We at Magistral Consulting offer a full suite of solutions regarding the fund administration outsourcing process. Here are some of the reasons, you should be working with us:

Cost competitive: We are a fund administration outsourcing company with offices in a low-cost country like India. This arrangement ends up building all the advantages of outsourcing fund administration along with the unbeatable price advantages due to the location. An indicative savings of up to 70% is very much possible by outsourcing your complete fund administration process

Proprietary Tools: We have multiple online investor relations and client relations tools that update the data in real-time. This means no follow-up required on anything. Both GPs and LPs get the real-time fund performance snapshot

Middle Office Support: Our middle office support includes EoD reporting, Intraday reporting and reconciliations, performance contribution and attribution reporting, trade bookings and settlements, Daily cash positions, Daily NAV and reconciliations, vouchers and reimbursements, performance calculation and reporting, and monthly factsheets. Apart from this, we offer documentation support throughout the fund set up process in tax havens and other countries

Access to the ecosystem of professionals on need basis: We have a roaster of professionals who may bring in expert opinions if the situation so demands like the liquidation of assets, legal hassles, translators, and lawyers specializing in a specific country’s commercial laws

Global Presence: With delivery centers based out of India for cost advantages and sales offices or resellers in San Francisco, New York, London, Oslo and Singapore, we understand the global nuances of the fund administration process

Magistral Consulting (www.magistralconsulting.com) has helped multiple Private Equity, Venture Capital, Hedge Funds and Real Estate Funds in outsourcing Fund Administration Process

To explore the opportunity of working with us, talk to our client references or having a look at our work samples related to the fund administration process, please write to Prabhash.choudhary@magistralconsulting.com

 

 

The author is the CEO of Magistral Consulting which is a premier research and operations outsourcing firm for Private Equity, Real Estate, Investment Banks, and Family Offices across the globe. He could be reached at Prabhash.choudhary@magistralconsulting.com for any queries.

 

Keywords: operational due diligence, due diligence, operational risk, hedge fund, private equity, fund manager, private equity outsourcing, fund administration outsourcing, private equity fund administration outsourcing, real estate fund administration outsourcing, target company, hedge fund manager, investment manager, institutional investor, asset owner, risk, limited partner, asset manager, value creation, due diligence process, service provider, operational improvement, hedge fund industry, hedge fund failures, commercial due diligence, operational due diligence process, investment risk, private markets, risk management, financial statements, operational efficiency, private equity firm, real estate funds, client company, member firm, valuation, asset class, asset, managing director, capital expenditure, investment decision, operational due diligence team, private equity investors, due diligence questionnaire, acquisition, cybersecurity,

Recent post