Ernst & Young’s Private Equity Fund Administration Survey seminar highlights need for transparency
Private Equity will continue to play an important role in the post-crisis environment say Ernst & Young Addressing an audience of approximately 50 finance professionals at the OGH on Tuesday (12 July), Ernst & Young Partner, Mike Bane, and Executive Director, Peter Miller, presented the results of the firm’s second European Private Equity Fund Administration Survey.
The first report was conducted in 2009. Now some 18 months on, the survey has been repeated interviewing 34 leading PE fund administrators based in Guernsey, Jersey, Luxembourg and London during the final quarter of 2010 and early 2011.
The survey has identified industry trends such as the increasing need for transparency and for detailed and timely reporting to investors in the industry. At the seminar Ernst & Young expressed the need to meet the growing expectations from investors, the market place and regulators.
Providing an insight into the main issues faced by leading fund administrators Mr Miller said; “Because of the changing requirements of the AIFM Directive and the European-wide recession, there are several factors that could be attributed to a shift in our expectations since we conducted our last survey.”
“Last time 53% of participants said they wanted to expand geographically. Since then only 35% of those questioned have now set up new offices in other locations which is considerably less than expected,” said Mr Miller.
“It is evident from the results that geographical expansion outside Europe, namely towards Asia, the Far East and Luxembourg is also expected for the next report and although there are industry factors that influence these outcomes, Ernst & Young will be watching closely to see where these trends go,” he said.
With principal areas of inquiry including service offering, organisational models, financial reporting, IT environment and client base, the survey also highlighted that organic growth is the most cost effective method of expansion.
Based on the survey results, the presenters highlighted that the Private Equity fund administrators will have no choice but to accompany the Private Equity houses in their current and upcoming challenges by positioning themselves in the centre of this business.
Stricter reporting requirements and increased global operations are examples of activities Private Equity fund administrators will have to overcome to win in this consolidating market.
A greater focus on marketing tactics is also high on the agenda compared to the results in 2009, and Mr Bane said that this was not a surprising outcome.
“Changes within this industry are leading towards a much more competitive market. In addition to maintaining and monitoring the industry trends, what is important for Guernsey and Jersey is getting out there as a jurisdiction and being upfront with the Private Equity houses in order to create and build relationships. This movement is likely to bring back offices to the fore of the Private Equity arena. Private Equity fund administrators will be required to expand their offering to meet the requirement of their clients,” Mr Bane said.
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