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2023 Report

Fund Administration Technology:
Private Equity’s
New Differentiator

How elite GPs are distancing themselves from peers and meeting evolving LP demands

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Executive Summary

With the proliferation of complex fund structures, increasing regulation, expanding investor reporting requirements and legacy manual processes, the performance demands on private equity fund administration have become acutely more challenging.

To find how GPs are dealing with these new pressures, examine what’s influencing LPs’ investment decisions and better understand both groups’ view on the role of advanced technology in today’s environment, Gen II Fund Services commissioned The Harris Poll.

Key findings

An elite class of GPs seeks the most sophisticated technology to address growing fund administration complexity.
Automation influences LPs willingness to invest with a fund sponsor.
GPs are not meeting LPs expectations for service levels in fund administration.

A stark disparity in how GPs view new technology

Our research confirms that advanced technology is the only way to meet the needs of today’s investors, but many GPs are hesitant to change.

The emerging elite

28%

We would like the most sophisticated technology available, as it would be a key differentiator for us.

The vast middle

50%

We are willing to tolerate some risks involved in new technology, as there would be some benefits.

The view from the bottom

22%

We don’t want the risks involved in changing the types of technology in our fund administration.

Survey Question: Which of the following best describes your attitude about incorporating new technologies in fund administration?
1 2 3

Key Finding 1

Technology is creating a new class of GPs

There is a distinct group of GPs who are eager to be on the cutting edge of technology. They understand the correlation between technology risk and reward, and have committed to gaining and maintaining market advantage by digitizing their fund administration. Interestingly, our research shows that this elite class of GP also tends to outsource their fund administration.

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28%

of GPs would like the most sophisticated technology available, seeing it as a key differentiator

70%

of GPs who say they are ahead in digital transformation are also more likely to outsource

78%

of GPs who don't want to risk new technologies see themselves as failing to get ahead in digital transformation

22%

of GPS don't want the risks associated with changing their fund administration technology.

Key Finding 2

Technology will play an ever growing role in differentiating GPs

While the elite forge ahead, our research shows that for every GP seeking the latest digital tools, there is a GP who is avoiding technology adoption. We see a material number of GPs lagging the elite.

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Key Finding 3

Bigger investors, bigger expectations

Digital maturity has become a mark of a forward-looking GP, one that has a better grasp on its portfolio and can deliver better insights. Institutional investors, in particular, are swayed by advanced technology.

Woman on the phone Woman on the phone

19%

of GPs overall say LPs are a lot more likely to invest with a fund sponsor who uses automation in fund administration

36%

of LPs are a lot more likely to invest with a fund sponsor who uses automation in fund administration

48%

of institutional LPs are a lot more likely to invest with a fund sponsor who uses automation in fund administration

What makes best-in-class fund administration

Though they both rank speed as the No. 1 characteristic of successful fund administration, GPs and LPs are divided in other areas. Notably, service is a top priority for LPs but a lower consideration for GPs.

Rank
1
2
3
4
5
LPs
Speed
Response Times
Cost
Actionability
Service
GPs
Speed
Actionability
Efficiency
Subject matter expertise
Technology

Survey Question: When you consider successful fund administration, please rank-order the following priorities in order of importance, with 1st being the most significant and 9th being the least significant.