Advancing Mixed Collaborations between Public and Private Sectors during the Period of Financial Unification
As firms increasingly adopt multi-asset, blended strategies, multi-currency, and cross-border activities, the private market landscape is evolving rapidly. This shift brings about a host of operational and data management challenges that private market managers must address to remain competitive.
Regulatory Complexity and Reporting Requirements
With the updates to Form PF demanding more sophisticated data collection, validation, and submission processes, private market managers face increasing regulatory complexity and reporting requirements. These demands necessitate robust systems capable of handling the intricacies of various asset classes and strategies.
Rising Operational Costs and Margin Pressures
The need to scale infrastructure and systems to accommodate both traditional private assets and the growing influx of retail investor capital alongside institutional investors is driving up operational costs and margin pressures. Managers must find ways to streamline their operations and manage costs effectively to remain profitable.
Integrating Public and Private Market Data
The convergence of public and private markets necessitates the integration of diverse asset types into a unified investment strategy. This requires improved operational infrastructure and fluency to manage these assets coherently and transparently.
The "Retailization" of Private Markets
The introduction of retail investors into private markets brings about complexity in investor servicing and reporting. Retail investor expectations and behaviours differ significantly from institutional clients, necessitating tailored operational capabilities and data management solutions.
Keeping Pace with Consolidation and Diversification
Consolidation and diversification trends among asset managers often demand operational adjustments, system interoperability, and data governance alignment across merged entities and increasingly diversified asset classes such as private debt and infrastructure.
Liquidity Management and Secondary Market Developments
The blurring boundaries of public and private markets require robust data systems able to support asset valuation and liquidity profiling beyond traditional models. Managers must be prepared to navigate these complexities to ensure the liquidity of their investments.
In summary, private market managers are challenged to build scalable, flexible operational platforms and sophisticated data management systems to address evolving regulatory, investor composition, and asset blending demands brought by the convergence of public and private markets. Standardization of the investment lifecycle and automation of reporting can reduce operational overhead, enabling managers to focus on generating returns for their investors.
Sources:
[1] AlphaWeek. (n.d.). The Future of Private Markets: Challenges and Opportunities. Retrieved from https://www.alphaweek.com/private-equity/the-future-of-private-markets-challenges-and-opportunities/
[2] PwC. (2021). Private Markets: The Future of Investing. Retrieved from https://www.pwc.com/gx/en/asset-management/private-equity/assets/private-markets-the-future-of-investing.pdf
[3] KPMG. (2021). The Blurred Lines Between Public and Private Markets: Navigating the Complexities. Retrieved from https://home.kpmg/xx/en/home/insights/2021/05/the-blurred-lines-between-public-and-private-markets-navigating-the-complexities.html
To remain competitive in the evolving private market landscape, managers need to invest in robust systems that can handle the intricacies of multiple asset classes and strategies, particularly alternative investments like private credit. This is crucial as more institutional investors and retail investors pour capital into these markets.
As operational costs escalate due to the need to scale infrastructure and accommodate diverse investor types, managers must find ways to streamline their operations and manage costs effectively. This could involve integrating public and private market data into a unified strategy, providing retail investors with tailored operational capabilities and data management solutions.
Moreover, the convergence of public and private markets requires managers to navigate complexities in asset valuation, liquidity profiling, and regulatory reporting. Standardization of the investment lifecycle and automation of reporting can help reduce operational overhead, allowing managers to focus on generating returns for their investors.
