By A Paris – The way investment professionals work has changed. Hybrid business practices are coming into play, following successful vaccine roll-outs in many parts of the world, and the financial industry is adjusting to this new reality. The year has seen digitalisation accelerating across the hedge fund world, with investor relations (IR) and capital raising teams becoming accustomed to handling their business remotely. Raising capital through virtual media has been another challenge managers have had to wrangle with.
Clear and concise communication is the bedrock of successful investor relations and buoyed successful managers through 2020, especially in the early months when the pandemic first broke out. Investor expectations and needs heighten in times of crisis and therefore it is through these periods that investor relations teams are most under pressure.
The shift in due diligence processes and communication with investors, both existing and potential, is something IR teams had to contend with. The 2020 Global Alternative Fund Survey by EY finds that nearly 60 percent of investors surveyed experienced, at least, minor disruptions to due diligence processes as a result of going remote. “Newer relationships were most strained with 30 percent of managers responding that travel restrictions caused major disruption to prospective limited partners,” the report outlining the survey results details.
In an article written for the Alternative Investment Managers Association (AIMA), Ron Biscardi, CEO, iConnections says: “With physical meetings and conferences being put on hold, the industry has had to find new ways to reignite activity and match allocator capital with investment strategies. The key to success has been combining human investor relations expertise with the tools and data already at our fingertips. By harnessing technology to enhance rather than replace the human touch, investor relations teams around the world have been able to use information to help managers and allocators understand how to connect with the right partners.”
Technology has a critical role to play in navigating the landscape. Aaron Steinberg, Head of Prime Services Sales and Relationship Management at BNY Mellon Pershing outlines in an article: “It is advised that managers today do not neglect their tech stack, but conversely invest in outsourced fund admin providers, which can help offset fee compression headaches, as well as CRM tools that can be additive in a digitised cap intro process.”
In conjunction with the increased use of technology solutions to manage investor relations, the industry witnessed a rise in uptake of capital introduction platforms. For example, Goldman Sachs’ Marquee Connect, launched in July 2020 has reportedly seen business picking up. Hedge Connection also launched a new virtual conference and enhanced online capital introduction technology platform last year.
Don Steinbrugge Agecroft Partners writes: “Hedge fund capital introduction events, in which investors and fund managers meet in a speed-dating environment, have increased in popularity within the past decade.” The firm expects both prime brokerage and independent cap intro events to continue to be popular with alternative investment managers and investors, despite in-person conferences starting to take place again. n
