From fragmentation to foundation: centralizing data for modern fund managers
Fund administrators can cut through the noise by standardising and centralising GPs’ increasingly detailed and varied data requirements, says Citco’s Joep Hamers, Head of Real Assets.
While Private Markets’ (Private Assets & Real Assets) growth and innovation have led to a greater choice of investments, complex structures, access points and economics for LPs in recent years, the typical corollary for GPs is complex organisations running with highly fragmented legacy systems and a variety of legacy service providers. This makes responding to ever increasing investor reporting requirements challenging while also hampering further growth.
Yet it does not have to be this way, says Hamers. He explains how opting for one full-service administrator can help GPs remove common pain points, meet the increasing transparency requirements of LPs, gain invaluable insights across their assets , and reduce costs.
As GPs’ operations have become more multi-faceted, where are the main pain points emerging in fund administration?
GP operations have become much more convoluted in recent years. Organisations are larger, managing greater volumes of capital across broader investor bases, through a variety of asset classes which each have their own data intensity & requirements while the increasing international reach of many GPs adds a further layer of difficulty – as the number of jurisdictions involved increases maintaining consistent data governance frameworks across jurisdictions becomes an increasingly complex undertaking.
GPs are also diversifying their strategies and asset types. This is especially pronounced in Infrastructure and new Real Assets investment types such as data centres, where managers must capture and report on investment performance, income flows and covenant data alongside traditional fund-level metrics. In many cases, this diversification has been achieved through M&A activity and that’s meant bringing in their legacy target organisations’ fund administrators. Many GPs today have several legacy fund administrators working in different parts of the firm using a range of operating models, technology stacks and reporting templates - that leads to a variance in reporting. Although these administrators are technically performing the same functions, the layout, detail and requirements can differ substantially.
Given that many GPs are active in the M&A space and have made significant acquisitions to date to offer a suite of new products to their investors, having different reporting is problematic – ideally, they would want their investor experience to be standardised across all products. This is why we’ve developed an eco-system that works across multiple asset class specialisms. Regardless of the GPs’ underlying systems or asset classes, our technology enables us to ingest, normalise and consolidate data, documentation and workflows into a single platform - establishing a single, auditable source of truth across the entire servicing lifecycle and asset base
The result is meaningful reduction in the operational friction that can arise from fragmented systems, manual processes and distributed teams - this can help cut through some of the complexities GPs face today.
And what about LP requirements today, particularly given the increasing participation of individual investors in private markets?
Fund design has changed and now includes bespoke fee arrangements and several layers of waterfalls, adding cost and operational burden. At the same time, LPs are asking for more transparency more quickly from GPs. This is increasingly relevant for infrastructure strategies, where LPs often require more granular, asset-level visibility. And their requests have moved beyond financial data to requirements for a variety of non-financial information as LPs increasingly seek accountability in every part of a GP’s organisation.
When you also include individual investors, that adds further complexity because their needs are quite different. While institutional investor bases tend to consist of a relatively small number of LPs making large commitments, there’s also often large numbers of individual investors with much smaller ticket sizes – the volume of information that needs to go out is much higher and it needs to be packaged in a way that suits the respective GP’s operational set-up as well as the individuals investor reporting requirements.
So, while LPs may be asking for highly detailed reporting, individuals have different servicing requirements focused more on fund valuations and reported in a less customized manner by investor – they’re unlikely to need the underlying asset-level information that institutional LPs require these days, for example. Because of this Citco has recently launched a retail arm to service these investors either through a retail feeder fund sleeve or via a full registered offering.
What kinds of information do GPs need to capture?
The answer varies by asset class, but GPs typically gather large volumes of financial and non-financial data – much of it sourced through third parties. This is where fund administrators have a clear and valuable role to play; aggregating, cleansing and harmonising that data into a single, reliable, structured source, that GPs can readily access and act upon.
For infrastructure strategies, this extends to highly granular detail – loan terms, cashflow waterfalls, collateral structures, and ongoing covenant tracking – often drawn from multiple counterparties. Normalising this data is critical to enabling consistent, timely monitoring of portfolio performance.
More broadly, the data GPs need spans ESG reporting from portfolio companies, counterparty-specific information, geographic and location data, and inputs that feed into risk, legal, compliance, and portfolio management functions – extending well beyond fund management alone.
For us, that means understanding who all our stakeholders are and how each of them uses these data points. It's an evolving journey; ensuring data integrity, consistency and accessibility across every function a GP manages, takes time, collaboration, and a clear strategic vision.
Given all this complexity, how should GPs be thinking about fund administration?
The starting point should be how they can best serve their investors. How can they address the needs of their LPs and, where relevant, those of their individual investors? They need to consider how they can align reporting across the different asset classes they manage. Yet they also need to look beyond their needs today and ask what information they might possibly want to receive and use tomorrow. Reporting - and data more generally - is only becoming more detailed, and it’s sometimes a struggle for GPs to get to that information, whether it’s financial or non-financial.
So, rather than trying to continually add more resources to the firm, GPs should consider how they can outsource those components to an administrator that can provide the level and type of service that they need in a way that’s fully integrated into the firm’s existing workflows. Rather than using a mosaic of different administrators for individual strategies and functions, they can rationalise service providers. This helps standardise the operating model and makes it scalable – so that it supports rather than hampers growth.
And the final piece is important, especially given the pace of change: how granular does the data need to be, and how can data architectures be structured and normalised so that outputs are both actionable and decision-ready? This includes data points from individual assets – if you can provide granular information at this level, it can help GP and LP decision-making for each investment or periodic commitment wave.
How are AI, machine learning and large language models cutting through some of these challenges?
Since GPs collect information from a range of sources, the volume of unstructured data and inconsistent formats creates significant data quality and processing challenges Yet there are now effective document intelligence tools that can extract all the necessary information and present this in structured format for onwards consumption in the value chain. So here, technology is helping without the need to change the existing systems directly focussing on how the information is received, structured and consumed.
AI implementation and development is happening quickly, and we’re constantly looking at new use cases and learning from past implementation – there are always questions about how we can use it more and how trustworthy it can be. Yet we’re already automating high-volume processes and centralising data so that GPs can gain insights in a way that would have been unimaginable even just a few years ago.
GPs themselves are also adopting AI tools and integrating large language models. In principle, that should mean with data availability through centralisation GPs can run various complex analytics on their data themselves, adopting a self-serve without having to go to an administrator or operator to obtain every single data point; that would mean administrators become the middlemen collecting the available data to feed client models. It could also mean that data quality improves and frequency increases. However, I used the words in principle because success here requires a clear data strategy on the part of both GPs and administrators, plus the capability to execute on such a strategy.
What future trends should we be looking out for in fund administration?
Reporting timelines will continue to compress, and GPs will increasingly demand real-time access to granular, comprehensive data. Administrators are responding by becoming smarter in how they handle these requests and in how they make information available to the different parties across the private markets value chain. Importantly, every participant in that chain has a role to play — whether as a source of data, such as a portfolio company or real assets, or as the entity responsible for delivering and centralising it.
At the same time, a significant structural shift is underway in how GPs approach their own technology. Rather than maintaining and investing in internal systems, many are choosing to sunset legacy platforms to reduce costs – without necessarily overhauling their underlying processes. In doing so, they are placing greater reliance on their administrators' technology across their organisations and asset classes.
The endpoint of this evolution is compelling – GPs will ultimately require only a business intelligence layer that sits above the data, eliminating the need to maintain full internal systems or shadow records, and reducing internal costs considerably.