Taking real estate and private equity to the next level

February 2014

Banks, securities investors and hedge funds enjoy access to many powerful and well developed financial services software solutions. But private equity and real estate funds aren’t so lucky. They feel they are forced to rely on an untidy and inefficient mix of technology: thirdparty solutions that provide basic general ledger functions; custom and home-grown processing applications; and, for specific tasks, the magic of Excel spreadsheets.

Private equity and real estate funds say that stagnant administration technology in their sectors is a real problem. Users complain that some solutions have not been significantly updated for decades. This means the technology lacks vital functionality and there is a dearth of integrated, end-to-end solutions.

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EU alternatives directive creates new yardstick for funds

The Alternative Investment Fund Managers Directive (AIFMD) is an EU directive that will place hedge funds, private equity and other alternative investment firms in a regulated framework, in order to monitor and regulate their activity.

It covers aspects such as remuneration policy, depositary, capital requirements, valuation, reporting requirements and risk management. For many hedge funds, complying with AIFMD in a timely manner can be daunting. But the advantages of the new processes in risk management and valuation are becoming apparent.

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Cutting through complexity

As operations become more complex, private equity and real estate investors are seeing the advantages of outsourcing.

First movers among Europe’s private equity (PE) and real estate (RE) investment firms are moving to outsource administration. Although the trend is still in its early stages, the number of requests for proposal (RFPs) has increased notably in the past six months, and a few early mandates have already been issued.

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