Tag Archives: Fund Administration and Accounting

Every great fund starts with a vision. A unique strategy, an untapped market, a brilliant thesis. You, the fund manager, are the architect of that vision. Your focus is singular: producing stellar returns throughout its prestigious legacy.

You plant a flag in Delaware-the undisputed gold standard for private equity, VC, and hedge funds. It’s an apt choice. With business-friendly laws and major tax advantages, this has become the bedrock of investor confidence. Funds birthed here manage more than $3.8 trillion of capital for a reason.

Delaware Fund - Outsourced Fund Operations

Delaware Fund – Outsourced Fund Operations

Your plans are well-laid out. But after getting all set up, a different reality drags itself into your view. Placing your fund creation between your eyes and spirit proves not a straightforward matter. It’s a mountain-best climb with expert outsourced fund operations.

Why Delaware? The Tax-Friendly Foundation of Fund Success

Delaware is certainly the jurisdiction of choice for investment funds for very good reasons. Its legal setup so far has been providing so many advantages that it has indeed become the preferred home for fund formation. Here are some of the main reasons why Delaware continues to be in great demand:

Business-Friendly Laws

Domestic and international funds choose Delaware LP and LLC structures for their flexibility, privacy, and robust asset protection. By 2024, managers incorporated more than 55 % of all U.S. private equity and venture capital funds in Delaware (Delaware Division of Corporations, 2024).

Tax Advantages

Delaware eliminates state corporate tax on out-of-state income, charges no sales tax, and grants investment entities favorable treatment. Thanks to these incentives, managers have registered over 70 % of U.S. hedge funds in Delaware (National Venture Capital Association, 2024).

Investor Confidence

Delaware-based funds now manage roughly $3.8 trillion in capital, earning the trust of investors worldwide (Delaware Division of Corporations, 2024).

Industry Trends & Insights

Some of the industry trends that underline the importance of fund operation outsourcing include the following:

Outsourced Fund Operations - Industry Trends & Insights

Outsourced Fund Operations – Industry Trends & Insights

Globalization of Operations

Delaware funds increasingly serve international LPs, and outsourced partners help navigate cross-border compliance and tax complexities.

Tech-Enabled Administration

Leading firms now use AI and automation for faster, more accurate NAV calculations, reconciliations, and investor communications.

Data Security

In light of rising cyber risks, Delaware’s confidentiality laws combined with secure outsourced platforms provide peace of mind. The 2024 Cybersecurity & Data Protection in Fund Administration Report found that 63% of firms now prioritize data security as a core part of their outsourcing strategy.

Speed to Launch

With expert support, Delaware funds can go live in just 4-6 weeks, critical for managers seeking a first-mover advantage. According to a report 2024 data, 40% of funds now launch within 6 weeks of formation.

Growing Adoption

Over 55% of global asset managers now outsource some or all back-office operations.

The Power of Outsourced Fund Operations

The most successful fund managers of 2025 have a secret weapon: they leverage a partner for expert outsourced fund operations. This strategic shift allows them to conquer the operational mountain and focus entirely on performance.

The core value of outsourced fund operations: It does not merely save you money; it sells you back your most valuable asset: time, and truly terpenes the expertise into the fund’s composition.

Here’s how outsourced fund operations change the game:

Navigate the Maze with an Expert Guide

Instead of dealing with compliance issues, your partner ensures a smooth launch in 4–6 weeks, a key feature of premier outsourced fund operations.

Escape the Vortex with Flawless Execution

Imagine a world where every administrative task is executed with precision and efficiency. For a partner of this caliber, it cannot be otherwise!

Build Unshakable Trust through Transparency

With cutting-edge platforms, your partner in outsourced fund operations delivers the real-time reporting that modern investors demand.

Future-Proof Your Fund with the Power to Scale

As your fund grows, your operational support scales with you. 79% of fund managers now adopt these flexible models to manage growth effectively.

How Magistral Becomes Your Co-Pilot

At Magistral Consulting, an end-of-end solution is offered to fund managers. The services offered constitute specialized outsourced fund operations that take care of all aspects of your fund’s operations to ensure smooth functioning. Services will enable the funds to be launched, grown, and scaled efficiently, so you can focus on generating returns and building a legacy.

Comprehensive Fund Administration

We handle all the operational components so that your Fund may continue to operate efficiently, real-time NAV, investor reporting, and capital call management are some of them. Our team ensures that these critical functions are executed with precision, so you can maintain focus on the strategic aspects of your fund while we handle the day-to-day operations.

Regulatory & Compliance Fortress

Navigating SEC filings and tax compliance can be overwhelming, especially in a regulatory landscape that is constantly changing. Magistral Consulting offers expert handling of such matters, to make certain that your fund remains in compliance and that all legal exposures are kept out of harm’s way. We serve as a regulatory fortress before you, mitigating all risks while making sure that your operations are efficient and in accordance with legal requirements.

Scalable, Flexible Support

As the operational needs of a fund change with its growth, we, therefore, offer scalable and flexible support befitting the fund’s size and complexity. Whether you are a first-time manager or an established portfolio holder, our services grow with you and maintain operational efficiency at every stage.

Cutting-Edge Technology

Technology today plays a big role in operational success in this fast-paced environment. We use secure cloud environments and automation to provide real-time reporting, safe data storage, and smooth communication. Our technology allows you to get fund information in real-time from anywhere in the world while maintaining the highest levels of data security. Due to AI-powered analytics and advanced reporting tools, there is complete control over and visibility to be obtained of what goes on with the assets.

Proven Cost Efficiency

Outsourced fund operations to Magistral Consulting provides significant cost savings, with our clients seeing a reduction in operational costs by an average of 25%. In other words, with a blend of our team’s expertise and technology, you can keep overhead costs lean, instead choosing to focus on the things that really matter, whetting your investment appetite. Our solution is to give you maximum value at the most efficient costs, therefore offering you a competitive advantage without lowering any quality standards.

Case Study

A Story of Speed and Success – The $300M Launch

Background

A first-time private equity manager with a brilliant fintech thesis raised $300 million in commitments. They wanted to focus on sourcing deals and needed expert help with the entity formation, regulatory filings, and investor reporting.

The manager partnered with Magistral Consulting to navigate the operational complexities and ensure a timely launch.

The Challenge

Key operational tasks, such as forming the fund entity, meeting regulatory requirements, and ensuring accurate investor reporting, need to be handled seamlessly and efficiently. The manager required a trusted partner to manage these while they focused on deal sourcing.

The Solution

Magistral Consulting provided:

  • Entity Formation: Ensuring compliance with Delaware regulations.
  • Regulatory Filings: SEC and tax filings timely done.
  • Investor Reporting: Transparent investor reports in real time.

With these outsourced fund operations tasks in expert hands, the manager could concentrate on their core strategy.

The Result

The fund was launched in just six weeks, impressing investors and gaining immediate momentum. The fund manager avoided common launch delays and established a solid operational foundation.

 

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to prabhash.choudhary@magistralconsulting.com

They involve delegating key back-office tasks—like fund admin, compliance, and reporting—to experts, allowing fund managers to stay focused on investment strategy.

With the right partner, a Delaware fund can launch in just 4–6 weeks—crucial for first-mover advantage and early investor momentum.

Without expert support, fund managers often face delays in fund launch, compliance risks, reporting errors, and high overhead costs—taking time and focus away from their core investment strategy.

Rising complexity, tighter compliance standards, and investor demand for transparency are pushing fund managers to adopt outsourcing. It offers speed, accuracy, and flexibility without increasing internal overhead.

Fund admin services become more important under investment fund industry expansion and diversification. Fund administrators would maintain the efficient flow of basic functions, such as accounting and valuation, compliance, reporting, and investor relations.
>Fund admin services that have marginally enhanced operational efficiency along with even higher
standards for compliance now become essential ingredients in the success of funds, especially in today’s competitive market yet increasingly regulated. This article explains the benefits of fund administration services, maintains awareness of how the industry is at a current stage, and covers how fund administration providers create opportunities for growth and value for fund managers and investors.

Fund Admin Services and their Increasing Demands

The market is going to grow further in the near future with fund admin services estimated at $9.5 billion as of 2022 with an annual growth rate of 7.5%, mainly on account of escalating regulatory requirements and the need for specialization. Alternative asset classes, including private equity, real estate, and hedge funds have driven demand for specialized fund administration services positively.

Fund Admin Services Growth Analysis

Fund Admin Services Growth Analysis

Services offered by the Fund Administrators

Fund admin services include a wide range of services that help fund managers to bring confidence and make their work effective and efficient.

NAV Calculation (Net Asset Value)

Net asset value is calculated through complex technology and accounting methods that gives correct NAV reporting. It plays a vital role in a foundation for all fund operations.

Compliance

With all the AML/KYC and regional regulatory standards such as AIFMD for Europe or SEC in U.S., fund administrators provide compliance oversight for funds, so as not to lapse into deviations and attract penalties.

Financial Reporting and Transparency

The fund administrators prepare and audit all financial statements with intent to be transparent among investors. Its services entail a quarter and year-end report with high investor confidence.

Investor Relations and Communication

Investor communication is a prime component of fund performance. Fund administrators deal with subscriptions, redemptions, and investor reporting, so that fund managers can focus on core strategies.

Data Management and Analytics

With data playing a more prominent role in investment strategy, administrators are providing analytics services that can really add value to the operation and reporting of funds.

Industry trends shaping Fund Administration

Some critical trends are shaping and influencing today’s fund admin services landscape. Here they have had an impact on the growth, innovation, and revolution in the industry as a whole:

Industry Trends Shaping Fund Admin Services

Industry Trends Shaping Fund Admin Services

Digital Transformation and Automation

Automation has perfected accuracy and speed of a process. Every process is becoming automated through RPA, even NAV calculation without the interference of any human being by the administrators for higher accuracy.

Rise of ESG (Environmental, Social, Governance) Reporting

Fund managers now offering ESG compliance reporting services since ESG considerations have increasingly become relevant and help funds attract socially responsible investors.

Blockchain

For Transparency and Security many visionary administrators are embracing and using blockchain technology in their systems to significantly raise the level of transparency, reduce the chances of mistakes, and smoothen the process of transaction between investors. Potentially, blockchain can make reconciliation a more effective and secure process that changes fund administration further.

Growth of Private Markets

As the alternative assets grow—private equity, hedge funds, real estate—so too has the demand for fund administration, since such deals often
necessitate high information and are hence complicated, therefore requiring expert administration.

Case Studies: How fund admin services fuels success

To illustrate the effect of Fund Admin Services following are two case studies:

Case Study

A private equity firm with $2 billion in assets outsourced its fund administration to streamline compliance and reporting. By helping an organization outsource its fund administration to a specialist administrator, compliance-related operational costs decreased by 15 per cent while improving accuracy levels for reporting and satisfaction levels among investors.

Case Study

A real estate fund that handled complex property valuations entered into a partnership with a fund admin service who offered real-time NAV reporting, combined with data analytics. This meant that the discrepancies in valuations of the fund reduced by 20%, and dozens of hours each month in reporting that further helped increase investor transparency and trust.

Future Prospect for Fund Admin Services

The prospects of Fund Admin Services seem positive because of the growing industry, with growth increasing due to the growing need for asset managers to outsource the issues of complexity. Emerging technologies like AI and blockchain probably will redefine fund administration further by making it more transparent, secure, and operationally efficient. More and more, administrators will also become important guides that could nudge funds toward ESG-innovative, sustainable investment practices

Fund administration services are fundamentally imperative in order to ensure operational efficiency, compliance with rules and regulations, and trust of investors. The outsourcing of fund administration generally allows funds to achieve specialty expertise with lower costs while focusing on adding value to their investors. The evolution will only intensify the role of Fund Admin Services in empowering funds to scale, adapt, and thrive in this increasingly competitive market.

Personalization in Fund Administration: Tackling the Specific Needs of Clients

In investment landscapes that diversify fast and become more competitive. Fund Admin Services have specialized into providing what suits each specific fund. From an industry sector, a geographic location, or even an asset class, fund administrators now take the tailoring route and, therefore, become client centric. Personalized services by fund administrators allow the fund manager to operate with greater flexibility and adaptability. They address niche market demand and investor preference.

Industry-Specific Customization

Many industry sectors can be uniquely taxing. For example, private equity, hedge funds, and real estate fund has a different operational requirement complexity, as well as other specialized structures that relate specifically to tax. The specific sector knowledge of fund administrators who have adapted their services to the intricate requirements involved in such industries. For example, a private equity fund would necessitate several complex capital calls and distribution processes. Real estate funds, on the other hand, may require periodic asset valuation services based on property market conditions. Thus, operational efficiency and regulatory compliance can be enhanced with industry-specific solutions. This can be done by fund administrators who are knowledgeable in specific sectors.

Geographic Localization for Compliance and Reporting

As funds expand into global markets, administrators must become aware of region-specific regulatory requirements and reporting standards. Geographic localization means that administrators can customize service according to geography with all knowledge about the concomitant local compliance regulations, tax codes, and investor expectation for instance, a fund manager working in the U.S. and the EU would need to comply with separate rules such as SEC regulations in the U.S. and AIFMD in the EU. Skilled cross-border fund administrators can make those complex regulatory processes quite straightforward and will see that all regional requirements are met while reducing operational risks. It thus gives room for funds to expand confidently into other geographical locations, knowing they have reliable support in handling country-specific complexities.

Flexibility and adaptability towards meeting investors’ preferences

The competitive investment environment demands of investors the returns. Also, transparency, timely communication, and services well-tailored to their value systems. Many investors seek funds that combine ESG criteria. Administrators offer personalized communication and reporting tools. These enable the fund manager to update investors real time, enhancing transparency and trust.

Fund Admin Services by Magistral Consulting

Fund administration and accounting, functionally at the back end, is becoming critical for the fund operations. This process, if done right, should be able to enhance the positioning of the Fund as a more transparent and fairer manager of investors’ funds. It gives a fair chance to investors by addressing their concerns beforehand and outlining relevant questions in the documentation. So, this is what we are offering.

Updating Financial Records

It is our business to ensure that the records are up to date and filed in an appropriate manner. This enables the fund to keep all requisite compliance requirements.

Distributions Management

In calculating and distributing dividends, we aid in the process. And also preparing periodic updates relating to distribution of the fund to its investors.

Portfolio Valuation

NAVs of your fund are calculated and updated by us. This ensures that investment appraisal in terms of companies, equities and liquidity has an accurate price measure.

Admin Processes

All such processing which includes day to day updating, processing of trades, withdrawals, transfers, are done in a cost-effective manner.

Fund Setup

We assist in creating the funds in locations such as Cayman Islands, Luxembourg, and Delaware. And supervise the establishment activities that include research, legal and commercial aspects.

Preparing Reports

For investors as well as local regulatory authorities, we present comprehensive reports and perform filing procedures. And prepare all necessary documents in due course.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Subscriptions, redemptions, and the production of investor reports are part of the responsibilities of fund administrators which facilitate communication and helps build investor trust.

Fund administrators practice appropriate regulatory measures which include AML/KYC scoping, SEC in the United States, or AIFMD in Europe.

The financial statements reporting function endeavors for the prevention of unnecessary distrust by replicating accurate and timely reports to investors.

With the increases in private equity, hedge funds and real estate funds, the complexity of transactions and information management necessitated the provision of relevant services by the administrators.

In the fast-paced world of finance, accuracy and transparency are essential. Fund administration and accounting play a crucial role in ensuring investment funds operate smoothly and reliably. This article explores their importance, processes, challenges, and best practices.

Fund Administration: Facilitating Operational Efficiency

Fund administration covers a range of tasks that keep investment funds running efficiently. From regulatory compliance to investor relations, administrators ensure seamless operations. Key aspects include:

Fund Administration: Facilitating Operational Efficiency

Fund Administration: Facilitating Operational Efficiency

NAV Computation

At the heart of fund administration is the calculation of Net Asset Value (NAV). This metric reflects a fund’s per-share value after deducting liabilities. Since it serves as a key performance indicator, accurate NAV calculations are critical for investors and regulators.

Compliance and Regulatory Oversight

Fund administrators must ensure compliance with regulations set by authorities like the SEC in the U.S. or the FCA in the UK. They handle record-keeping, reporting, and internal controls to mitigate risks and maintain compliance.

Investor Relations and Service

Fund administrators act as a bridge between funds and investors, managing inquiries, subscriptions, and redemptions. By offering excellent service, they build trust and strengthen investor relationships.

Fund Accounting: Ensuring Precision in Financial Reporting

Fund accounting forms the foundation of financial reporting for investment funds. It includes specialized processes tailored to fund structures. Key elements include:

Fund Accounting: Ensuring Precision in Financial Reporting

Fund Accounting: Ensuring Precision in Financial Reporting

Portfolio Valuation

Fund accountants value assets such as equities, fixed-income securities, and derivatives. They follow industry standards and regulatory guidelines to ensure accurate financial reporting.

Expense Management and Allocation

Proper expense management optimizes fund performance and maintains fairness among investors. Fund accountants track and allocate costs like management and custodian fees based on fund documents and regulations.

Financial Reporting and Transparency

Fund accountants prepare financial statements that provide clear insights into a fund’s performance. These statements, including income statements and balance sheets, follow strict accounting standards to ensure transparency.

Risk Mitigation and Regulatory Compliance

Beyond valuation and reporting, fund accounting involves risk mitigation and regulatory compliance. Fund accountants identify risks, ensure regulatory adherence, and implement strong risk management strategies to uphold fund stability.

Challenges and Considerations in Fund Administration and Accounting

Despite their pivotal role, fund administration and accounting encounter diverse challenges in today’s dynamic financial landscape:

Regulatory Complexity and Compliance Burden

The regulatory environment governing investment funds is characterized by its complexity and continual evolution. Fund administrators and accountants must navigate a labyrinth of regulatory requirements, spanning reporting obligations to compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations. Remaining abreast of regulatory changes and implementing robust compliance frameworks is essential to mitigate regulatory risks.

Data Management and Technological Integration

The exponential growth of data poses significant challenges for fund administrators and accountants, necessitating robust data management systems and technological solutions. Leveraging cutting-edge technologies such as artificial intelligence (AI), machine learning, and blockchain can streamline processes, enhance data accuracy, and mitigate operational risks. However, integrating these technologies necessitates careful planning and investment in infrastructure and talent.

Operational Efficiency and Cost Optimization

In an increasingly competitive landscape, fund administrators and accountants face pressure to enhance operational efficiency and optimize costs. Streamlining processes, automating routine tasks, and leveraging economies of scale through outsourcing are strategies employed to achieve operational excellence while containing costs. However, striking the right balance between efficiency gains and cost containment necessitates careful consideration of organizational priorities and strategic objectives.

Emerging Trends and Best Practices

In response to evolving market dynamics and technological advancements, fund administrators and accountants are embracing innovative trends and best practices:

Digital Transformation and Automation

The digitization of fund administration and accounting processes is revolutionizing the industry, enabling greater efficiency, accuracy, and scalability. Robotic Process Automation (RPA), artificial intelligence (AI), and cloud-based solutions are being leveraged to automate routine tasks such as NAV calculation, reconciliation, and reporting, freeing up resources for higher-value activities.

ESG Integration and Sustainable Investing

ESG (environmental, social, and governance) factors are influencing fund management strategies and investment choices more and more. In response to investor demand for sustainable and ethical investing, fund administrators and accountants are incorporating ESG issues into their reporting systems and investment analysis. Funds can reduce long-term risks related to environmental and social variables and attract more socially conscious investors by adhering to ESG standards.

Outsourcing and Strategic Partnerships

In order to concentrate on their core skills, a growing number of fund managers are outsourcing non-essential tasks to specialized service providers, such as accountancy and fund administration. Businesses can obtain specialized knowledge, scalable infrastructure, and cost savings through outsourcing, which also lowers operating expenses and lowers compliance risks. Establishing strategic alliances with dependable service providers can improve operational resilience and agility, allowing businesses to more effectively adjust to shifting market conditions and regulatory demands.

Magistral’s Services on Comprehensive Fund Administration and Accounting Support

In the complex realm of finance, where accuracy and openness are essential, Magistral Consulting shines as a symbol of quality, providing thorough fund administration and accounting services customized to the specific requirements of investment funds. Committed to integrity, effectiveness, and client contentment, Magistral Consulting provides precise financial management solutions that enable clients to navigate the intricacies of the investment world with assurance and simplicity.

Fund Administration Expertise Unveiled

Our team specializes in providing fund administration services, leveraging a profound understanding of regulatory requirements and industry standards. From Net Asset Value (NAV) calculation to ensuring compliance and managing investor relations, we guarantee seamless operational efficiency for investment funds of all types and sizes.

Reliable Financial Reporting with Fund Accounting Solutions

Our fund accounting services are renowned for their precision and dependability. By utilizing advanced technologies and adhering strictly to accounting standards, we furnish accurate portfolio valuations, transparent expense management, and comprehensive financial reporting. Our focus on clarity and transparency empowers clients to make well-informed decisions and maintain trust among investors.

Tailored Solutions and Personalized Support

What sets us apart is our commitment to understanding the unique requirements of each client. Through personalized consultations and bespoke solutions, we ensure that every client receives the tailored attention and support they need. Whether it involves navigating regulatory intricacies or optimizing operational effectiveness, our dedication is to surpassing expectations.

Innovative Strategies for Today’s Challenges

In addressing contemporary challenges, we employ innovative strategies that prioritize staying ahead of the curve. Through the integration of automation, artificial intelligence, and blockchain technology, we streamline operations, enhance data accuracy, and minimize operational risks. By embracing a forward-thinking approach, we empower clients to navigate evolving market dynamics and seize emerging growth prospects.

The Future of Fund Administration and Accounting

The trajectory of fund administration and accounting is set for innovation and evolution as the financial landscape progresses:

Enhanced Regulatory Oversight and Transparency

Regulators are anticipated to heighten their supervision of investment funds, emphasizing the augmentation of transparency, investor safeguarding, and systemic resilience. This may involve regulatory enhancements such as elevated reporting obligations, more rigorous compliance criteria, and heightened scrutiny of fund governance frameworks. Fund administrators and accountants will be required to adjust to evolving regulatory directives and harness technology to bolster transparency and adherence to regulations.

Adoption of Blockchain and Distributed Ledger Technology

Increased efficiency, security, and transparency offered by distributed ledger technology (DLT) and blockchain can totally change accounting and fund administration processes. Fund administrators and accountants can use blockchain-based solutions for record-keeping, settlement, and transaction processing to increase data quality, streamline operations, and reduce fraud risks. However, for blockchain technology to become extensively used, industry stakeholders’ collaboration and governmental clearance are required.

Focus on Cybersecurity and Data Privacy

Amidst the proliferation of digital technologies and interconnected systems, cybersecurity and data privacy have risen to the forefront for fund administrators and accountants. Preserving the confidentiality of sensitive financial data, fortifying defenses against cyber threats, and adhering to data privacy regulations are essential focal points. It’s imperative to invest in robust cybersecurity measures, conduct routine audits, and implement data encryption protocols to effectively mitigate cyber risks and uphold investor confidence.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to prabhash.choudhary@magistralconsulting.com

Introduction

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. The outsourcing of the 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

Magistral’s Service Offerings Related to Fund Administration and Accounting

Magistral's Fund Administration Services

Service Categories for Fund Administration and Accounting for Funds like Private Equity, Hedge Funds and Real Estate

We provide the following services that are related to Fund Administration and Accounting:

Fund Launch Assistance

We assist in all operational aspects of the new fund launch. Our offerings are:

-Review of the offering document prepared by legal counsel

-Review of Operating Procedures

Accounting and Administrative Services

These services keep the fund operations running smoothly. Our service offerings are:

-Process Investor Subscription and Redemptions, corporate actions, etc.

-Record Trades, Non-Investment Transactions, Receipt/Payment of Intrest or dividends,  all trading and bank account activities, fees and rebates, etc.

-Maintain primary books and records

-Review trade exceptions

-Reconcile cash, positions, market values, etc

-Report client portfolio information

-Calculate management and performance fees from the source documents

-Allocate profit and losses, waterfall allocations, etc

-Prepare investor statements and distribution of the same

-Prepare audit package and draft financial statements including all schedules and footnote as per GAAP

-Liaise with auditors and counsels

Additional Private Equity Accounting and Administrative Services

Here are the services specific to a Private Equity Fund:

-Preparation and distribution of Capital Call letters

-Reconciliation of calls and distributions

-Waterfall allocations

-Fee Calculations

-Deal tracking and analysis

-Performance calculations

Tax Preparations

Here are the services related to tax preparations

-Maintaining tax capital accounts for all investors

-Preparing tax allocations, tax returns, and K-1s

-Communicate with external tax advisors

 

 

We also have an in-house online tool to track fund performance and all other details on a real-time basis. The access to the tool and its layout could be customized as per the client’s requirements

 

If you agree with the nature of the problems stated above and need to outsource the suggested 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 a 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

About Magistral

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

 

About the Author

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.