Oakbridge
Alex Smyth, director of funds at Oakbridge, speaks to Asset Servicing Times about the challenges facing private equity fund administration and why Jersey is an ideal jurisdiction
How have recent changes and challenges, such as rising interest rates and the impact of Covid-19, influenced private equity?
There have definitely been fundraising and valuation challenges since Covid-19 began. These challenges have remained and other global macro events have only added to the challenge. It is fair to say it’s been a difficult few years for private equity.
Outside of the already established mega fund managers — which have a loyal following of investors and are of a scale large enough to consider investment pipelines that other managers can’t achieve — Oakbridge have seen smaller to mid-cap investment managers implementing niche strategies, both with fundraising and investments.
For example, some managers have alternative fund structures which don’t carry dry powder, but raise money as and when needed for follow ups or new investments.
With Jersey’s variety of investment products and speed to market, it is an ideal jurisdiction for deal-to-deal activity.
How is the role of the fund administrator evolving in response to changes in the industry landscape and emerging trends?
Like the investment managers, fund administrators have had to adapt their processes in order to accommodate these changing trends and strategies, applying to both the servicing and pricing of structures.
It also requires Oakbridge to be agile and proactive to problem solve for our clients — speed of turnaround can be the difference between helping them complete a deal or missing it.
What is co-sourcing in the context of private-equity fund administration, and why is it becoming increasingly popular among managers?
Co-sourcing is when the manager holds the licence to its main software system, and so retains control of their data, but allows the fund administrator certain access rights to their software in order to perform data input services.
The principle behind co-sourcing is similar to the typical fund administrator’s role to the manager — it allows the fund administrator to complete more routine jobs as an outsourcing function, and allows the manager to focus on the high value tasks in investment management.
Co-sourcing can also lead to a better quality data being produced, and higher levels of transparency for investors.
In what ways are private-equity fund administrators expected to support managers amidst increasing regulatory standards and rising investor expectations?
Similar to the SEC’s new private fund-advisor rules response, this will allow for more opportunities for the fund administrator and investment manager to collaborate.
Fund administrators can also add that extra level of independence from the fund manager, and give additional comfort to both the regulator and the fund investors with their involvement.
Fund administrators, such as Oakbridge, are well placed to provide additional reporting to regulators and investors.
Part of the administrator’s role includes capturing and holding the relevant fund’s registers and data points, which are usually already uploaded to their fund administration technology solutions to automate this reporting.
How is technology, particularly AI, reshaping private equity fund administration, and what benefits does it offer?
With data becoming ever more prevalent in our industry, and even becoming ‘king’ in some circumstances, AI will continue to become more mainstream within the fund administration world.
While there is no blueprint from any single fund administrator, with a technological end-to-end solution that would fix all of the industry’s challenges, there are many great solutions in the market that interface with other non-brand related platforms via APIs.
Certainly I think AI and automated programmes will soon replace some of the administrative tasks, such as scraping data from agreements to upload into other fund administration software.
And finally, what is new on the horizon for your organisation and how will this benefit your clients?
Oakbridge is focused on building a longstanding quality business, which forges strong relationships with our clients. This is demonstrated by our rapid year-on-year growth.
We remain focused on the continued improvement of our service offering via new technology solutions, speed of delivery, and providing that same bespoke service offering to smaller and medium cap investment managers, who really value and need an outsourced provider to partner with, so that they can focus on their bread and butter.
Our clients are benefiting from the breadth of expertise on the island, and the opportunities that Jersey has to offer as a jurisdiction.
The funds industry is continuing to be driven by private equity and venture capital fund activity — accounting for a total of US$424billion of assets — as can be seen in the popular Jersey Private Fund product, which has grown to 692 funds since its launch in 2017.
