How to tick the right boxes when capital raising
By Robin Bedford, Opus Fund Services – The average hedge fund life expectancy is 3-5 years. Long-term viability is almost exclusively determined by ability to raise long-term capital. Many new managers launch without a major institutional ‘anchor’ investor, making it an instant chicken and egg problem. The smaller you are, the harder it is to raise capital.
Most institutional investors will not consider a manager until they reach a certain size, and have minimum track-record requirements, often 3 years. To reach that point, a fund needs to not only outperform its peers consistently, but to also have an excellent operational footprint. Typically, the choice of fund administrator, lawyer and auditor is critical during this period to reaching viability.
Having supported over 1,000 managers who successfully brought their products to market, the Opus team can make the difference between long term success or failure. Whilst initially, fund administration may appear to be a commoditised offering, the inherent strengths and weaknesses of the various providers can be the difference between passing or failing your next due diligence exercise. After the hard work is done, and an institutional investor is interested in allocating, the Opus team can help ensure that operational processes are in place meeting the allocators strict requirements. Innocently failing to answer just a single question correctly, might result in a red flag and prevent that invaluable allocation.
Why is this due diligence so important? A single example is cash controls, an area of ever-increasing scrutiny. A frequent question by allocators examines how the administrator accepts instructions related to money movements. Are they willing to accept an email as sufficient instruction? Whilst this might sound like a trivial question, email communication is fraught with risk. It is a critical area of review during due diligence exercises.
The high-profile scam affecting Tillage Commodities Fund and its administrator clearly shows why investor focus on this area. The Opus service seeks to avoid reliance on email as a primary form of communication. Instead, services are safely delivered through its proprietary client portal, Symphony 3.0. This highly interactive and intuitive real time platform facilitates secure communications and provides the ability to issue instructions safely. The platform boasts multi-factor authentication, NIST compliance, approved cyber-audit and has been subject to rigorous penetration-testing.
Clients use Symphony 3.0 for a whole spectrum of services which includes submitting trade files, break resolution, submitting wire requests, investor, and compliance activity, monitoring, and approving the NAV life cycle, and maintaining control of the audit process. The easy to use checklist on the landing page shows clients what they need to complete to prevent service delays. Institutional investor operational requirements were at the forefront of its development, ensuring that all boxes are ticked, when you need them to be.
As administrators transition to deliver their services via a SaaS model, Symphony 3.0 is defining the path for the future of fund administration. An institutional platform, for institutional investors. Arrange a demo today.
CEO, Opus Fund Services
Robin Bedford joined Opus Fund Services as Chief Executive Officer in 2008. Previously, he was a director and head of the Bermuda office for Omnium Bermuda Ltd. (formerly Citadel Solutions (Bermuda) Ltd.) between 2006 and 2008. He held various leadership positions including President of the Dundee Leeds group of companies between 2001 and 2006. Robin is a member of the Institute of Chartered Accountants of England and Wales and graduated with an Honours degree from University of Teesside, England. Robin has over 18 years of direct experience in the alternative investment space and is a Director and Officer of several large offshore investment vehicles.