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Managing multiple fund structures

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Another key operational challenge facing managers is keeping on top of what can often become numerous legal entities, as they build out their investment programmes in private credit. This might involve setting up workflow processes that span both closed-ended and open-ended funds, SMAs, funds-of-one, SPVs and hybrid fund structures; all for a single, overarching investment strategy. 

Fund managers need to ensure they are able to accurately show how much loan interest has been accrued, how much capital has been paid out, and accurately allocate the loan accounting results across each one of the legal entities. 

This is where technology plays a pivotal role. 

“As managers deal with more and more legal entities, it does require them to have an accounting system that can support more streamlined processing of all of the allocations across the different structures, depending on where the manager is purchasing the investment and/or where it is held,” comments Nerlekar. 

This equally applies to cash flow management. If it’s a simple two tier structure (Master/Feeder) one only has to monitor cash flow movements into the Master Fund, but this becomes a much more daunting process when there are multiple legal entities involved. 

Now, more than ever, it’s important for managers to have a look-through system that is tightly integrated for all of these different components, and can deliver institutional quality investment accounting, fund accounting and investor accounting. 

“We have the asset class coverage to fully support and manage the different terms of these loans, regardless of how large the overall fund structure is,” continues Nerlekar. “The user just has to think about where the asset is held, where the investors are coming in from, and how much capital they are putting in.” 

“What we try to do with Geneva is tell the middle and the back-office; book the activity you should be looking at from a business perspective and leave the rest of the accounting process to the system.” 

That way, there is less risk of human error. It doesn’t matter which legal entity, or which part of the fund someone wants to look at. Everything is presented as a single source of truth. 

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