Silver Anniversary Q&A with Claudia Bertolino
17 December 2024 - This year marks Claudia Bertolino’s 25th year at Citco Fund Services. In this exclusive interview with Real Deals, Claudia Bertolino, Head of Private Equity and Private Credit, Citco Fund Services (USA) Inc., reflects on her career highlights, the advice she would give her younger self and how the private equity market is making headwinds with technology adoption and diversity
How did you get started in private equity?
Claudia Bertolino: After graduating from Lehigh University in Pennsylvania, I was working at an asset management assurance group where I was managing assurance audits for offshore and onshore hedge funds. The specific funds for the asset managers that I was auditing tended to be difficult, derivative trading strategies and private equity investments. In those early days, with limited technology available, I found the private equity investments interesting because it was so immersive. You were required to go to brick and mortar investments that the portfolio was making to try and derive valuations you were participating in.
I was hired by Citco in 2000, where I continued to be a subject matter expert within a hedge fund servicing business, but several of the hedge funds were investing in private assets at the time. I had an intense ‘trial by fire’ type of acclimation and education to complex fund accounting structures. Since then, I have been reinvented at Citco many times, which has allowed me to see so many parts of the business.
How different is the private equity industry now to how it was when you began your journey at Citco 25 years ago?
CB: Compared to when I entered the industry in the 90s, the size of assets under management in private equity and private asset strategies is exponential. There was a significant concentration of capital in the early days, but now you have smaller players and a lot of M&A activity.
I also think that private equity firms have improved their image. I did not think that they needed to improve their ethos necessarily, but I think that their image may have been underestimated. Firms are now showing themselves to be responsible investors.
How has the role of technology formed and changed in the private equity market during the past 25 years?
CB: Are there risks with technology adoption? Absolutely. But the enchanting part of the private equity industry is that risk presents opportunity. I think that you are extremely risk averse, you are missing out on opportunities to create value.
There is significant market disruption that is already in play, and I think that will be both of extreme benefit, but also detriment if not respected and harnessed adequately. Gen AI and some of these newer technologies are extremely exciting, and we are already seeing real benefits in the world at large that can influence investment opportunities.
I think in today’s market, technology has really not only supported this side of the industry with its complexity, but it has participated in forcing it forward. There have been significant changes to how the world transacts; you now have straight through processing on cash management and control layers that are automated.
When you go back 25 years, there was not a digital basis for a lot of the transactions - it was paper. Today, the focus is on digitising business to create speed and efficiency and I think this is going to only continue. Technology has been both a catalyst and necessity in our industry, and it is a big part of what has gotten the market to the place it is today.
What is one moment or particular time that was a highlight for you over the past 25 years?
CB: I am grateful when I'm tasked with questions like this, as they provide moments to reflect.
A moment that immediately springs to mind is when I was asked to join the business leadership team at Citco. We are a small group of executive leaders that are tasked with devising the strategy of all products, in all regions across our firm as Citco Fund Services.
By the time of this appointment, I had been with Citco for quite some time, and I truly was invested in the firm and aligned with the culture. This achievement was one that I was always striving for. Once I started to participate with a seat at that table, I realised that not only was it proving as valuable as I had measured it, but that it actually exceeded my expectations of how valuable that seat at that table was, as I realised I truly had an ability to affect change at Citco.
What do you think are the main challenges facing the market today and beyond?
CB: In these moments, I wish I had a crystal ball!
Competition is one key challenge; I think there are a large number of private equity investment professional firms, and they are competing for a limited pool of attractive acquisition targets.
Talent is another as attracting and retaining skilled talent with the necessary expertise is a significant challenge. I think that the youth of today are so rich with perspective and talent – that certainly someone like me does not harness the way that they do –, and that is relative to technology. The youth of today have a very different perspective entering the workforce and it is an asset that we did not have at that age.
I think the key to solving this talent issue is consulting with this generation; to invest in being able to communicate with them and extract their ideas in a way that was perhaps not the legacy model from the early days in our industry. I think when it comes to identifying ways to best hire and attain those levels of talent, junior entrants hold those answers far better than we do.
Another challenge is the macroeconomic environment. Fluctuating interest rates are par for the course and these circumstances can impact the cost of capital but can also create opportunity - just look at the success of the private debt markets. I think that the alternative investment market at large knows how to extract value from such areas of volatility, but it would be great to have more predictability.
What do you think the private equity industry needs to do better in the next 25 years?
CB: There is a lot of opportunity for improvement. The current trajectory is healthy, but shifting focus from solely maximising short-term returns to driving sustainable long-term value creation should continue. Ongoing focus on factors such as innovation, customer satisfaction, market diversity and employee wellbeing should also be key tenants for any business.
What advice would you give your younger self and those entering the private equity market today?
CB: You can never underestimate the value of not just identifying a mentor that you can trust, but an advocate. There is a significant difference between a mentor and an advocate, and I think it is so valuable when you can identify people within your sphere of influence that can be both.
I have been extraordinarily lucky that I have encountered people that have been open and generous with their time and their advice. I think that if I could go back 25 years, I would interrogate, enquire and demand a little bit more time knowing how imperative that advice was to my career.
For those entering today’s private equity market, having a different level of understanding and appreciation for technology is top of list. I think holding good public speaking skills is equally as important; the youth of today are far more attuned to social media but that does not necessarily prepare you for live interaction. I think that a focus on professional public speaking technique, interview and dialogue skills are areas that should be invested in by those entering the market today so that they can participate and connect with the wider generational industry.
This article was originally published in Real Deals.