Private markets transformation: Creating the infrastructure for sustainable growth

Private markets (sometimes known as ‘alternatives’) are one of the great success stories in our islands’ economy. It’s a huge privilege for me and my colleagues here at PwC to be advising businesses that create so much wealth and jobs locally, while helping to channel vital investment into innovation and sustainable development worldwide.

This is a sector that continues to grow and mature at pace. We’re seeing both reinvestment from existing investors into follow-on funds and fresh investment coming in from new investors looking to diversify their allocations. In turn, longer-term investment horizons within private markets create a greater resilience to economic cycles.

Harnessing more advanced tech

The move to a modern enterprise architecture could provide a way forward. But change on this scale can be intimidating. There is also a feeling among some private markets’ professionals that their operational requirements are too bespoke to benefit from the kind of systems overhaul we’re seeing in many other areas of financial services.

Nonetheless this modernisation is critical in achieving scalability in Private Markets operations to support the next impending round of industry growth and provide a compelling service and experience for clients. It will also make more valuable use of the precious time and skills within the team.

The other big driver for modernisation is peer pressure as investment gathers pace. We’re already seeing this impact in areas such as changes in fund administrator. Managers want to partner with administrators with more advanced capabilities to allow them to meet stakeholder expectations and expand. Not only providing a service offering differentiator, technology advancements are also having the double-effect of driving down the barriers historically associated with switching fund administrators. A strong technology offering is now table stakes in this industry.

Making a success of modernisation

So how can your business move forward and make the most of your investment? In my experience, the key is recognising that this is an enterprise rather than just systems modernisation. Effective modernisation involves far more than just putting in new systems and flicking a switch. In complex private markets firms, the best results come from bringing together the critical levers of people, data, sourcing, process and technology.

The latest workflow tools provide a good example of how to harness and combine these levers within a private market setting. If we look at a deal closing process at a private markets manager as a case in point, this requires careful input across multiple functions. Effective adoption of workflow technology allows seamless collaboration and coordination right through from origination to close. Analytics and visualisation capabilities can in turn bring fresh insights to aid strategy and execution. Such tools provide the glue that can harmonise teams and enable them to move in unison. To make the most of the potential, it’s also critical to secure buy-in and move forward with upskilling within the various contributing teams.

Can you keep pace?

So if transformation and change are gathering pace, can you really afford to be left behind? When thinking about whether modernisation is essential, a nice-to-have or just a disruptive distraction, there are five critical considerations that you should assess and address:

• Are system constraints inhibiting your ability to deliver your strategy?
• Are system deficiencies inhibiting your ability to deliver the insight and transparency your board, investors and regulators demand?
• Are your systems nimble and integrated enough to keep pace with continual change?
• Are you at risk of falling behind your peers locally and globally?
• Are you finding it difficult to attract and retain the mid and back-office talent you need to keep operations running?

If the answer to any of these questions is’ yes’ or ‘I’m not sure’, please feel free to get in touch.