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“Operational maturity” next for firms in private markets

Efficient processing systems come into focus more than ever in 2020, as investors keep pressing for low management costs and the hunt for profit moves from public markets to private equity and debt. Asset manager advisor Alpha FMC sums up its new-year expectations.

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Digital developments on many fronts will require a lot of learning at asset managers’ offices in the coming years. This picture emerges when Alpha FMC, a consultancy to the wealth management industry, lines out its outlook for 2020 in a brochure.

This coincides with a need for product innovation among the fund managers, while fees are pressed on many traditional fund concepts as passive funds gain territory, and investments move from public markets to non-listed placements in search for higher returns.

Connecting

At the operational end, this translates into an imperative for rational processing – supported increasingly by new technical solutions. Consolidation of data platforms across asset classes and functions “front-to-back” look set to continue, and so is service outsourcing “in the cloud”.

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“Alpha anticipates further growth and competition in the Private Markets space for 2020 – where success will increasingly benefit from developing greater efficiency across the value chain,” writes Dominic Coyle, at Alpha’s UK office, in the outlook report.

“Sustained growth requires operational maturity, and firms must adapt to provide greater flexibility in their investments and increased sophistication in their operations.”

Many asset managers could still make good money from well-oiled traditional activities. Yet, with private markets getting more important, an increasing number of firms will find themselves assessing how they should ensure and track their value creation, how they can scale and how well they service their more sophisticated investors, Alpha predicts.

“AltTech” to the rescue

“For many of these, the answers lie in transitioning from ‘spreadsheets & process’ to ‘systems & workflow’; embracing technology to minimise manual tasks, automating or outsourcing low value-add activities and utilising data to support decision making,” Dominic Coyle writes.

“We’ve seen an increase in ‘AltTech’ built specifically to tackle these challenges and capabilities throughout the investment lifecycle are being digitised as this area of enterprise technology expands. Solutions can now supercharge deal sourcing through big data, track value creation opportunities or reduce duplication of efforts in due diligence.”

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