March 22, 2017
Increasing regulatory pressures and technology demands are putting more pressure on private equity firms to outsource their administration services.
Traditionally, private equity funds have been self-administered. However, this has begun to change in recent years. According to *Preqin, the number of private equity and real estate funds availing of third party administration services is estimated to be 30% today and is set to increase to 45% by 2018. Centaur outlines some of the key drivers behind this trend.
The administration of private equity funds requires focus and attention to detail. Increasingly, private equity administration also requires significant investment in processes, resources and technology. By outsourcing fund administration, fund sponsors can focus on their core competency – investing and generating returns for their investors. The result is a more scalable, robust process which enables sponsors to grow their businesses in an efficient manner.
- Increasing Regulatory Pressure
AIFMD and FATCA are just some examples of highly complex regulations that private equity firms must now comply with. It makes sense for private equity firms to outsource regulatory compliance functions to expert administrators who have the necessary skills to ensure that funds and their general partners are compliant.
- Investor Demands for Greater Independence and Transparency
Investors are demanding operational excellence from their funds and are increasingly demanding third party administration. The trend to outsource is being driven by market pressure on firms to deliver accurate record keeping with greater transparency. Using a third party administrator adds credibility to private equity funds.
- Increasingly Complex Structures
As investment structures become more complex, private equity firms are realizing that an Excel spreadsheet will not suffice anymore. Outsourcing to expert, specialist fund administrators minimizes errors and ensures efficient, accurate reporting for investors, general partners and regulators.
“The private equity market is rapidly changing and Centaur is positioned and ready to service this vibrant and dynamic industry,” says Eric Bertrand, Founding Partner of Centaur Fund Services. “2016 saw extraordinary growth in this sector and all indications are that growth will continue to be steep through 2017 and beyond.”