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29 November 2022

Understanding the Key Components of a Debt Fund Manager's Tech Stack

As global debt fund managers aim to stay ahead of the competition in this unpredictable market, firms are evaluating different technology solutions and services available to private markets that ensure operational excellence. The 4th Annual CFO/COO Private Debt New York conference hosted by LPGP Connect in September 2022 sought to address these issues, as well as to understand the latest challenges facing CFO’s and COO’s looking to deliver an optimal experience to their investors.

SS&C Advent participated on the panel: Taking a closer look at resourcing firm operations where contributors explored the essential elements of choosing and partnering with service providers in a post COVID world. The panelists shared their views on how to drive efficiency and operational excellence, especially when determining what items to insource and outsource. The growth in private markets is creating more competition and as a result, LPs are requiring more transparency and investor due diligence from their GPs. As debt fund managers evaluate technology solutions, they should ensure that these solutions meet their reporting and data requirement needs.

All in one vs multiple providers

It is important to understand which vendors will be able to help a firms business scale as they grow and expand to new lines of business. There are no shortages of technology options to evaluate, with many specializing in key components of a firm’s business - whether it’s deal pipeline management, accounting, or fundraising. However, while smaller tech providers may have a slight edge in specialization, there is a significant risk that disparate systems will not speak to each other in a meaningful or seamless fashion. Overall, there is not a one size fits all approach; partnering with the right providers can help you find the best fit for your firm.

People are the drivers of success

People matter. Regardless of a firm’s tech-stack, it still involves people to employ and manage the systems. Therefore, where you recruit and how you manage people are key components of your success. In many cases, firms prefer to co-source or outsource certain tasks to third-party vendors to mitigate key-person risk and prioritize high-value tasks. The breadth and depth of the vendor’s knowledge in performing those selected tasks matters. For those that choose to fully outsource to an all-in-one solution, they are still responsible for the output and investor reporting. It’s key for the fund manager and vendor relationships to maintain a transparent partnership.

The consultative approach benefits evolution

It’s widely apparent that when a vendor acts in a consultative approach, it creates a strong reciprocal relationship between the two entities. This style benefits both the industry and client to evolve, scale and grow in this competitive market environment. Firms can look to vendors for support in a variety of ways outside of maintaining the technology. Vendors have the advantage of working alongside multiple clients and can offer support from their vast experience and expertise of working with your peer-firms. Fund managers can support technology vendors, for example by beta testing new releases, or having input in the solution roadmaps. This is a strong mutually beneficial feature of the consultative approach.

This conference presented attendees with many actionable insights into the private debt market, as well as what to consider when evaluating technology and services. For debt fund managers evaluating third-party technology and managed service offerings, contact us to learn more about SS&C Advent Geneva and its suite of solutions available for private market investors.