Majority of GPs and LPs Expect On-Demand Portfolio Reporting to Become Standard Over the Next Three Years

16 November 2023 - Most general partners (GPs) and limited partners (LPs) expect on-demand or ‘live’ reporting on portfolio company performance, including Net Asset Values (NAV) and Environmental, Social and Governance (ESG) metrics, to become standard over the next three years. This is according to new research commissioned by CSC, the leading provider of global business administration and compliance solutions to clients worldwide.

CSC’s study1 – The Future of Private Capital 2023 – found that more than half of GPs (55%) expect either on-demand or daily portfolio performance reporting to become normal over the next three years, with one in five (20%) expecting live updates. Some 44% expect live or daily updates on NAV deadlines, with three-fifths (58%) on cyber security issues such as data breaches and 43% for broad ESG reporting.

While GP sentiment towards reporting is echoed by the LPs surveyed for the report, the study found LPs are even more focused on the need for on-demand live and daily data. Around two-thirds (64%) expect on-demand or daily portfolio performance reporting to become normal over the next three years, with a third (35%) expecting on-demand live updates.

Three-fifths (60%) of LPs expect live or daily reporting on operational SLAs, such as NAV deadlines, while 67% expect it on cyber security issues, such as data breaches, and almost half (48%) expect it for ESG reporting. In terms of ESG, 58% are expecting daily or live information on portfolio company diversity and inclusion policies to be normalized over the next three years.

“Our latest study reinforces a widespread industry focus on data capture, analytics, and ever-more granular levels of reporting,” commented David Sarfas, co-head of Fund Solutions at CSC. “GPs openly talk about regular updates on everything from artificial intelligence to sustainability in the not-too-distant future. This will only add to funds’ operational burden, necessitating more investment in technology and building deeper relationships with service partners.”

This year’s study by CSC, the third such report by the firm, comes at a challenging time for many private capital market stakeholders. To capture growth opportunities, some GPs said they would look to expand their geographic coverage, with 47% saying their ambitions here were ‘significant.’ Almost half (49%) said they would significantly expand the use of fund credit facilities, while 43% said they would significantly expand the use of hybrid or interval funds.

To better manage growing levels of complexity and administration, a quarter of GPs (26%) said they would invest in technology frameworks. When asked what would positively influence their opinion of fund GPs, 89% of LPs said self-service functionality.

Given ever-increasing levels of operational complexity and reporting requirements, a third of GPs (32%) and LPs (34%) expect funds to maintain or grow their technology-led outsourcing models.

David added, “GPs see technology as one way to square the circle of doing more with less in a cost-sensitive environment and when reporting demands are accelerating. GPs of all sizes will need systems that collect, store, authenticate, integrate, and present data in a usable form across asset classes. This includes specialized asset modules, real-time data warehousing, and bespoke reporting.

“Our study found the private market industry expects greater operational complexity, with stakeholders looking at outsourcing and co-sourcing to meet a material need for scalable, specialized, and on-demand resources. While outsourcing provides a variable cost structure for operations, it’s also an avenue for strengthening a fund’s technology stack without breaking the bank. It reflects a deep need to connect disparate systems because unrestricted data flows are crucial to scalable operations.”

To receive a copy of CSC’s The Future of Private Capital 2023 report, please contact Camilla Wyatt / Kate Burns / Saffron Wainwright, cscteam@citigatedewerogerson.com, +44 (0)20 7025 6561.

1CSC, in partnership with the data team at Global Custodian, polled 210 GPs, mostly CEOs, CFOs, and COOs or their direct reports. The survey ran through May to June 2023. Most respondents were from the U.S. (71%), with others from Ireland, Australia, New Zealand, Canada, and the U.K. Nearly half (47%) were from smaller funds with less than $1 billion in AUM, though a significant number had more than $10 billion. In addition, 55 limited partners (LPs) were polled on the same themes.

About CSC

CSC provides tailored administration and strategic outsourcing solutions to support the complex operations of alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance. A market leader working with funds of all sizes, we’re the trusted partner of choice for 90% of the Fortune 500® and 70% of the PEI 300. Privately held since 1899, CSC is a global company with capabilities in more than 140 jurisdictions. We’re capable of doing business wherever our clients are by employing experts in every business we serve. We are the business behind business®. Learn more at cscgfm.com.

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