Built to add value
Horseshoe Fund Services: Best Offshore Administrator – Hedge fund managers are seeking fresh ideas to achieve position returns. This need has driven significant growth in private lending/specialty financing, including real estate loans, peer-to-peer lending and merchant cash advances.
“While borrow/interest rates in general remain very low, there is increased scrutiny on lending to individuals and small businesses, particularly those that are seeing especially volatile cash flows due to the current economic and social environments,” comments Michael Gentile, Senior Vice President, Head of US Operations, Horseshoe, “Hedge funds, often holding a surplus of cash on hand, can help fill this void and provide much needed liquidity to borrowers, while earning a premium interest rate and positive performance for their own investors.”
He notes that a significant challenge with this strategy is the valuation of the assets: “Among other things, it requires a very specific knowledge of the borrowers to determine the probability of full repayment at maturity, or alternatively if the value of the assets may need to be written down intermittently.”
The experts at Horseshoe have spent significant time and resources to understand the market and different valuation metrics, which enabled the firm to provide an independent valuation service. “It is essential for the managers to have a documented, thorough valuation policy prior to launching a fund. We have also found it very beneficial to ensure the auditors provide their agreement on the valuation policy at the outset. This will avoid issues and/or potential surprises during the annual audit of the fund,” explains Gentile.
Another essential building block of the experience Horseshoe provides clients is cutting-edge technology, robust infrastructure and expertise. The polarisation of administrators into global giants and smaller specialists is going to continue. Whatever the direction, technology will pave the way.
Gentile outlines: “At Horseshoe we are embracing innovation and technology so we can bring efficiency and operational excellence to our clients. Our integrated technology platform has become one of our key competitive advantages. It is playing an important role in creating lean and efficient processes for our clients and it is also eliminating duplications and delays in the workflow.
“Our fund administration system integrates the core areas of portfolio processing, general ledger accounting and investor allocations, allowing for system generated and customisable reporting at both investor and portfolio level. Our system can also support tracking consolidated investor level and portfolio data across holdings in multiple funds.”
Given the increased reporting and escalating regulatory, infrastructure requirements and fee pressure, managers will have to closely and wisely revise their business model and address current operational concerns. In Gentile’s view: “Outsourcing some of the functionalities is the way forward. And this is where Horseshoe can step in and take away some of the burdens and the challenges faced by the hedge fund managers and their clients. We understand the regulatory and compliance requirements and we are well positioned to help clients navigate and comply in this ever-changing business landscape.”
The firm prides itself on taking the time to listen to clients and understand their needs. Horseshoe is proactively engaged and always looking for ways to add value and to increase efficiency without sacrificing quality.
Senior Vice President, Head of US Operations
Michael Gentile, a Chartered Alternative Investment Analyst and Financial Risk Manager, brings over 20 years of successful experience in the fund administration industry, including expertise in investor services, internal controls and procedures, compliance and anti-money laundering. Prior to joining Horseshoe, Michael was a SVP at Citi Hedge Fund Services (Citi) where he lead a team of 35 staff and he was responsible for the investor services relationships of many large and diverse clients, as well as managing and coordinating projects that included fund launches, system development and system conversions. Michael’s accounting career began with State Street Corporation, a mutual funds administrator located in Boston, Massachusetts. He graduated from Boston College with a Bachelor of Science degree in Business with a concentration in Finance. He earned the CAIA and FRM designations in 2008 and 2017, respectively.