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Bringing alternative investment investor relations and onboarding into the digital age

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One of the persistent pain points for alternative fund managers is finding a way to streamline the investor onboarding process by automating the subscription document process. To date, this has remained a notoriously inefficient and error-prone set of processes, stymieing the ability for managers – both hedge funds and PERE funds – to bring investor capital into funds and put that capital to work in a timely fashion. 

Focus on the front office

A recent survey by MergerMarket and Pepper Hamilton (Going the Distance: The Expanding Lifecycles of Private Equity Funds) finds that the entire lifecycle of PE funds appears to be lengthening. According to the survey, while private equity firms took 6-18 months to complete their latest fundraising, a majority found themselves in the 9-18 month category.

Anything that can therefore facilitate the process of bringing new investors into a fund has the potential for managers to shorten that fundraising cycle and put money to work more effectively, stealing a march on their peers.

“In the alternatives industry, no one has standardised the subscription documentation that is used to subscribe to alternative investment funds. As each private fund has its unique qualities, a law firm will create subscription documents and investor packs that can run to 40 pages or more, and they will differ between each law firm, fund product and jurisdiction. From that perspective, it is quite a fragmented industry,“ comments Joe Henkel, Director, Global Solutions at SEI Investment Manager Services in Dublin.

“The same is true of the investor reporting process in the alternatives world. Even though associations like the Institutional Limited Partners Association (ILPA) have tried to standardize reporting templates, there remain a lot of variations due to GP and LP requirements,” Henkel continues.

The technology opportunity

To tackle this issue, SEI has developed an online platform called SEI Trade that streamlines the end-to-end processing of investor activities, allowing investor relations teams, in particular, to review, approve, track and take delivery of subscription documentation, KYC / AML requirements and supporting documentation.  

The genesis of SEI Trade came about after SEI was approached by a manager with a large, diversified fund product line. The manager in question had different IR offices around the world working with a wide range of different subscription documents for each different product, creating a spider’s web of complexity that prompted the manager to ask if  there was a more efficient way of “doing this.” 

In response, SEI built a solution to take those subscription documents in whatever form and however they are written and bring them all together into a single dynamic online environment. The key was to ensure that the platform could not only handle this particular client’s specific requirements, but it also had sufficient flexibility to accommodate any other client’s unique requirements. 

“When an institutional investor, for example, is filling in the subscription document, SEI Trade streamlines the process because it is bringing everything into a secure, centralised online environment. What it also means is that when the subscription documents are being completed, the platform is capturing all the investor data in a clean structured way. 

“This is important because oftentimes, when managers have initial contact with an investor, they start gathering information in an unstructured, sometimes haphazard way. It is a very manual, paper-driven process. When it comes to investor reporting, fund administration, tax compliance etc., the manager doesn’t have good clean, consistent, structured data on that investor,” explains London-based Giles Travers, Director, Alternative Investment Funds at SEI Investment Manager Services.

That problem is instantly nipped in the bud. As the entire onboarding process is securely conducted online, and the investors are inputting the subscription information themselves, it means that from day one the manager has good structured data. 

Around a dynamic document management solution, SEI Trade also incorporate multiple workflow elements, allowing fund managers to see where new investors are in the onboarding process within the firm. A global fund manager with IR teams in different regions can now deploy SEI Trade and overcome what was previously an opaque, fragmented process where one IR team, say in Europe, did not necessarily know what their counterparts in Asia were doing because the investor relations process was completely siloed.  

Now, global IR teams can easily review the investor onboarding process and the entire pipeline of subscriptions.

“The compliance teams, the legal teams and the fund administration teams can also see that information. Our clients say that the main benefits are the reduction in time and costs of sending out investor documents, greater transparency over their pipeline, a streamlined way of closing capital, and from a compliance and regulatory perspective, a full audit trail of all contact points with their investors. The aim is to make it as efficient as possible. We’ve already seen one client raise more than USD1 billion of new subscriptions go through SEI Trade” asserts Henkel.

Going Global

As global fund managers face increasing pressures to comply with regulations and provide better transparency and communication with investors, it is incumbent upon front-office teams to leverage operating models that can scale effectively. Technology that provides a closer interface between front-office portfolio managers and IR teams is just one way to achieve a more effective global operating model. 

This was recently pointed out in a Fundfire opinion piece written by EY on 7 September, 2016 ($File/EY-fund-managers-must-transform-front-office-ops.pdf). 

In this piece, EY writes that portfolio managers and risk managers will need the right technology “to gain a holistic view of transactions and exposures around the globe. This includes the ability to efficiently and effectively capture and execute trades across borders using a “global blotter.” In fact, managers may find it necessary to establish a centralised execution desk that facilitates increased controls. 

“SEI Trade does just that – it permits managers and intermediaries to establish a centralised execution desk for their private funds.  All of these changes should be underpinned by enhanced internal communications between and within geographies, which can be enabled by both new technology and improved processes and workflow,” continues Dan Ceneviva, Director of Solutions at SEI Investment Manager Services.

Moreover, as SEI Trade has the flexibility to handle all major investment vehicles or transaction types, the technology makes it easier for a global asset manager to expand its product lines and diversify their offerings. 

This has the potential to give managers a competitive edge by giving better client service, moving into a format where it is easier to go through the regulatory and compliance processes of onboarding new investors. If a manager has an investor already subscribed to one fund on SEI Trade, that manager can easily add them to any new fund strategies they might launch, going forward. It streamlines the interaction, eliminating the potential for delays and input errors.

Accessing new distribution channels

Ceneviva believes that SEI Trade is advantageous not just for managers and their investors, but it has enormous benefits for fund intermediaries as well.

“It is useful for any large global alternative manager where they have a number of different funds and a sizeable investor base. Where fund managers are distributing their funds through intermediaries such as broker dealers or private wealth channels, SEI Trade brings further advantages.” 

Travers further explains, “For example, a private equity manager might try to tap into the HNW investor market by setting up access funds (feeder funds). Ordinarily, a PE manager is used to dealing with 200 investors across their funds. The idea of doubling that number by targeting HNW individuals is a potential onboarding challenge that they are not set up for. As such, some clients see SEI Trade as a useful solution for helping them get into private wealth distribution.”

To illustrate the point, one of SEI’s clients is using the solution across their range of hedge funds and private equity funds. They have 14 different workflows across their IR teams and work with five fund administrators, processing 450 investor subscriptions per month; all of which is now being facilitated by SEI Trade.


Now, more than ever, any global asset manager or private wealth manager wishing to gain a competitive advantage should be reviewing the market to understand how technology can enhance the efficiency and effective of their investor relations activities. 

“The alternative investment industry, particularly for illiquid strategies, is waking up to the opportunities that technology can offer to deliver a superior client service in the face of increasing investor demands, diverging regulatory requirements and the jurisdictional and operational complexities of raising money globally,” concludes Henkel.


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