Citco and Houlihan Lokey publish survey of global industry leaders, benchmarking industry best practices in fund administration and valuation
Research was conducted in association with Private Funds Management and presented at an Invitation Only Event and Panel Discussion on January 31 in London.
London, 26 January 2017 - The Citco Group of Companies (“Citco”), the global leader in fund administration services and Houlihan Lokey, Inc. (NYSE: HLI), the global investment bank, in association with Private Funds Management (pfm), today released a research report entitled, “Achieving Excellence in Private Fund Administration & Valuation: The Outlook for 2017 and Beyond.”
The original research surveys 100 global industry leaders, including private equity, real estate, debt, infrastructure, venture capital and secondary firms, to benchmark industry best practice in fund administration and valuation, two important areas for private equity and related asset classes.
In today’s increasingly competitive and regulated environment, institutional investors expect ever higher standards of operational excellence from fund managers. Following the 2007-2008 financial crisis, fund administration and independent portfolio valuation have come under increased scrutiny from regulators and investors requesting greater transparency and accountability. Administration responsibilities are further intensified as managers continue to invest in more complex capital structures with new and emerging asset classes. The report found that, as a result, fund administration and independent valuation will remain central concerns for fund managers in the years ahead.
Most respondents 73.9 percent have outsourced their fund management function to specialist third parties. 78.6 percent of respondents stated that they view fund administration as a value added service, and almost three quarters of General Partners (GPs) indicated that administration has a role in future planning, demonstrating the importance of fund administration to the overall operation of a private fund’s business.
David Sarfas, Citco’s Head of Private Equity and Real Estate in Europe, said, “Institutional investors are increasingly requiring more information, more transparency, and a level of reporting that is faster, accurate, and detailed. Put simply, cookie-cutter administrative solutions are no longer sufficient to meet the needs of today’s advancing industry. Fund managers look to administrators, like Citco, as partners that can provide sophisticated, rigorous, and, most importantly, bespoke solutions that are customized to meet their evolving needs and those of their Limited Partners.”
Nikolaos Perros, Citco’s Head of Private Equity and Real Estate, added, “One way that Citco has become an even more valuable partner to our clients is through our investments in technology. Citco created a proprietary web portal, CitcoOneTM, to present a real-time, visually stimulating and enhanced user experience that satisfies the most demanding institutional investors. CitcoOneTM leverages new technology frameworks to intelligently expose different levels of content and give fund managers the data they need to make better decisions – and that is exactly the type of responsiveness and sophistication that is needed in today’s fund administration.”
Outsourcing valuations to a third party is less widespread, particularly in Europe. While a vast majority (85.7 percent) of GPs believe that independent third party valuation is a clear way of providing comfort and clarity to investors, only two thirds of respondents make use of some form of independent valuation as part of their LP reporting. This may reflect that almost half of survey respondents are based in Europe where, in contrast to the US, the practice is less prevalent but is gaining traction as GPs cater to US investor demands. Notably, a quarter of fund managers not currently using an external valuation provider anticipate doing so in the future.
Cindy Ma, Houlihan Lokey’s Global Head of Portfolio Valuation & Fund Advisory Services, noted, “Although the US valuation market is much further ahead than the rest of the world, we observe that best practices increasingly are being adopted elsewhere, and managers aiming to attract top LPs among their investor base need to comply with the high standards of corporate governance.”
Milko Pavlov, Senior Vice President in Houlihan Lokey’s London office, said, “Non-US managers are becoming more concerned with the reputation of their service providers and are starting to understand the limitations of low-cost solutions which do not meet their timing requirements or lack industry expertise and real market colour.”
Research Launch and Panel Discussion
Research findings will be presented at an invitation-only event on Tuesday, January 31, 2017 at 8:00am GMT the Chesterfield Mayfair Hotel in London. The event will include a panel discussion, featuring:
- Cindy Ma, Managing Director, Global Head of Portfolio Valuation & Fund Advisory Services, Houlihan Lokey
- Davis Sarfas, Head of PERE Europe, Citco Fund Services
- Anne Sheedy, Director, EQT Services (UK) Ltd
About Citco Group of Companies
The Citco Group of Companies is a worldwide network of independent financial service companies serving the world's elite hedge funds, private equity and real estate firms, institutional banks, Global 1000 companies and high net worth individuals. Citco companies service these sectors in their respective geographic areas by offering hedge fund administration, custody and fund trading, financial products and corporate and trust planning solutions. Citco has offices in over 40 countries with more than 6,000 staff.
About Houlihan Lokey, Inc.
Houlihan Lokey (NYSE: HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, valuation, and strategic consulting. The firm serves corporations, institutions, and governments worldwide with offices in the United States, Europe, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of our commitment to client success across our advisory services. Houlihan Lokey is ranked as the No. 1 M&A advisor for all U.S. transactions, the No. 1 global restructuring advisor, and the No. 1 global M&A fairness opinion advisor over the past 15 years, according to Thomson Reuters. For more information, please visit www.HL.com.
About Private Funds Management (pfm)
Private Funds Management (pfm) is a news service for professionals charged with overseeing the financial, operational and legal functions within private equity firms. Positioned at the heart of the global alternative asset industry, Private Funds Management is trusted to provide authoritative coverage the world over. We cover all the complex issues that it is absolutely critical to get right. To us, it’s much more than providing content: it’s about delivering information that makes a difference. With its dedicated team of journalists and researchers in London and New York, pfm delivers an authoritative mix of news, and analysis of the people and the trends shaping the market. PFM magazine was launched in 2004 and appears 12 times a year. Everything we publish is also available digitally on www.privatefundsmanagement.net, where we bring you daily news; incisive commentary on key events and wide-ranging roundtables with leading industry figures. And as the industry continues to change, our team stay focused on expanding and fine-tuning their coverage in order to maintain the timeliness and relevance our readers require.
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