Private capital continues to experience unprecedented growth, with fundraising reaching a record of nearly USD 1.2 trillion in 2021 (McKinsey, March 2022). The proportion of this asset class – which includes private equity, infrastructure, real estate and corporate loan funds – in portfolios has increased steadily over the last few years. Representing a modest 2-3% of their allocation a few years ago, private capital now accounts for over 10% of institutional investors’ portfolio investments. Sovereign wealth fund and foundation/endowment allocations into private equity are reaching levels above 10% in 2021 (source PE Investor report PEI, FY 2021).
This increase is no coincidence. The quest for performance and diversification has become a must for all institutional investors as they emerge from the sustained low-yield environment of the last decade.
In order to support this growth, however, institutional investors need to invest in new, innovative ways of managing the complex reporting and monitoring requirements of unlisted investments. This is where the Securities Services business of BNP Paribas, in partnership with AssetMetrix, can help.
Growing need for support
As investors increase their allocation to unlisted assets, they need greater access to:
Funding: either through traditional banking services (overdraft facilities, hedging products including currency hedging) or through investment banking services (structured finance of funds, assets or projects, M&As);
Investment monitoring: there is little data on many private capital assets compared to that provided for listed assets, and there is a lack of standardisation in terms of reporting. Detailed reporting can provide institutions with full transparency of their investments across liquid and illiquid asset classes in order to analyse their investment performance.
The Securities Services business of BNP Paribas can offer institutional investors this support by providing daily monitoring of their investment into Private Capital funds: managing cash flows, capital calls, fund distributions, investment portfolio tracking and performance measurement.
BNP Paribas also offers management companies a range of administration services in the main European countries in which unlisted asset investment funds are domiciled and in the Asia-Pacific region. In addition, we provide centralised administration of international investment vehicles domiciled in Europe, Asia and North America, both for the funds themselves and for the special purpose vehicles (SPV) they use for investment purposes.
Digitalised reporting and analysis with AssetMetrix
One notable change in recent years has been the growing digitalisation of reporting solutions for both management companies and institutional investors.
To meet this growing demand, BNP Paribas has taken a strategic stake in fintech AssetMetrix to further develop and digitalise its services for private capital funds. Thanks to this partnership, clients can access powerful analytics and reporting tools dedicated to the analysis of non-listed investments almost in real-time.
These solutions also provide access to risk and forward-looking analysis tools covering the entire asset class. These tools allow BNP Paribas customers to optimise their decision-making and risk-monitoring processes in respect of their investments.
The strength of these solutions stems from their ability to offer institutional investors an overview of their investments: a detailed analysis of stocks held, cash and performance forecasts, risk analysis and benchmarking services and, lastly, end-to-end workflow approval processes (notably regarding capital calls and distributions). These tools help investors understand their private capital investments better and compare them to traditional asset classes using tracking tools and custom dashboards.
Such tools are crucial for institutional investors, as private capital is an asset class that is still far from being standardised and uniform. Management company reporting on unlisted funds is still considerably diverse. The diversity of data received from investors makes analysing and then integrating it into appropriate dashboards extremely time-consuming.
With investment in unlisted assets by asset owners and asset managers growing, the need for more sophisticated monitoring and reporting tools has never been so important. With BNP Paribas’ support, in partnership with AssetMetrix, institutional investors can realise their private capital ambitions in a scalable and efficient way.
Appetite for private capital assets in Australia is set to continue, according to Cleyde Hazell – Regional Head of Private Capital APAC, as investors demand access to an increasingly broad range of assets. Australia’s custody industry is dominated by a handful of global providers, and one local player, and all are required to be able […]