Technology as a value driver
Despite the heavy reliance on legacy systems and processes, the results show that private equity firms recognise the value that the right technology can bring throughout the investment lifecycle.
Firms are almost unanimous in this understanding, with 96% of respondents believing that technology is a value-creation lever.
As investor expectations continue to rise, more private equity firms are looking to adapt and channel more effort into digitisation.
of respondents said technology transformation is one of their top three business priorities over the coming 12 to 24 months, suggesting that technology adoption in PE firms is set to spike over the coming year.
When we spoke to private equity firms about their technology adoption priorities, we were most interested in firms’ progress in the following areas:
There is also strong interest in a single platform to combine and streamline onboarding processes, with
expressing interest in a platform that can complete onboarding right through to digitasubscription documents. This indicates that while investor onboarding and implementation is a clear pressure point in the sector, firms are actively looking to technology to solve this headache.
We also investigated the external pressures that PE firms are facing when looking to digitise as investor expectations continue to rise.
Investing in data platforms
Firms are also investing in in-house data platforms to help easily consolidate and analyse data, derive meaningful insights from it, and drive better investment decisions. More than 60% of respondents are already using an in-house data platform in their organisation.
Those using in-house platforms cite several benefits in enhancing operational efficiencies, including:
time saving
better quality information
improved speed of information provision
higher security
reduction in key person risk
cost savings
Yet while the popularity of in-house platforms is booming, the results also signal an appetite in the industry to outsource their data platforms to minimise compliance risk and ensure scalability. The survey found that more than three-quarters
of companies currently using an in-house model are considering outsourcing this to a service provider or investing in a technology platform.
The survey results show that investing in data warehouses – a storage space for a large amount of data – is a key priority for firms.
of respondents either have, or are currently implementing, an in-house data warehouse.
The key drivers behind implementing an in-house data warehouse include the need for data consolidation across multiple systems and/or business units (56%); anticipated growth in data volume driven by growth ambition of the business (37%); requirements for predictive analysis, simulation, or scenario planning (11%); and aggregation of reusable LP data for fund onboarding (7%).
Putting compliance on centre stage
Meeting new regulatory reporting standards is a constantly moving target for private equity firms. While having to navigate an increasingly complex spiderweb of regulations, fund managers are also faced with increased pressure for transparency – so many are looking to leverage technology to reduce compliance risks, improve visibility, streamline task flow, and minimise administrative efforts.
The results show there is an increased demand for technology solutions to streamline compliance procedures.
of respondents are already using investor portals or data rooms for onboarding, offering greater security for sharing confidential information and allowing full control of the necessary documents for the due diligence process. With all the relevant documents stored and accessed in one place, fund managers can benefit from improved data transparency, as well as the ability to view benchmarked metrics and evaluate fund performances. This shift shows that firms are increasingly looking to technology to provide secure transparency and meet industry standards.
This document is provided for information purposes only and does not constitute legal, tax, investment, regulatory, accounting or other professional advice. For more information on the legal and regulatory status of IQ-EQ companies please visit www.iqeq.com/legal-and-compliance.