
Analysis
Infographic: Private debt’s renaissance by the numbers
The private debt industry has enjoyed impressive growth over the past few years. See how Alter Domus’ loan agency environment reflects the driving forces behind private debt’s journey to the forefront.

Private debt has come into its own and showed its resilience over the last four turbulent years of economic recovery and geopolitical conflict affecting the alternative assets space.
Globally, credit assets under management took off to new heights while other assets like private equity, venture capital, and real estate fought through startling slowdowns.
Since 2020, Alter Domus’ Agency Services has serviced new origination of over $750 billion, across over 2,500 loans. As a representation of the greater private debt industry, we cover five key trends that zoom in on certain driving factors of private debt’s growth.
Download our infographic below to see these trends represented or learn more from our loan agency experts at our Agency Services page.
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Analysis
In-house vs third-party fund administration: which is best for you?
As private markets continue to grow, Alter Domus examines what strategy managers should follow to optimize their back-office.

The rapid growth of the private markets industry during the last decade has placed new demands and pressures on the back-office infrastructure of private markets managers.
During the last decade, the private markets industry has been on a remarkable growth trajectory.
Since 2018, private markets assets under management (AUM) have grown at close to 20 percent per annum to reach USD 13.1 trillion as of 2023, according to McKinsey figures.
An operational upgrade
The growth and success of the industry has demanded a reassessment from managers of the resources and infrastructure their organizations require to address their client needs (i.e., investors) by delivering timely and meaningful reporting to them while providing the front office with the proper metrics and analysis to drive returns, expand their investment strategies and launch additional funds.
Traditionally, most private markets managers would have been running single strategy platforms and monitored and administrated a relatively small number of funds.
These modest reporting and fund accounting requirements shaped how managers built their back-offices. The need for fund accounting teams was small, run in-house and more than capable of covering reporting and accounting tasks using email, spreadsheets and basic “off-the-shelf” accounting packages.
As the industry has grown, however, there has been a step-change in what back-office teams are expected to cover.
As investors have increased exposure to private markets, and cheque sizes have increased, there has been an understandable demand for managers to produce more frequent, detailed and increasingly bespoke reporting and data.
Back-office teams have also had to adjust to covering the increasing number of funds, assets classes and investment strategies on manager platforms, as well as the additional reporting and accounting demands that come with offering co-investment, fund of one and special accounts access to key investors, not to mention the rising tide of regulatory reporting and the complexity that comes with managing secondaries and NAV loan deals.
The old, nimble back-office model of yesterday is no longer fit for purpose, and managers across the market are having to overhaul and scale-up back-office infrastructure, technology and operating models.
In-house or third-party
As managers review their operating models and assess how back-office capabilities will have to change to meet the demands of a larger, more sophisticated industry, the core question they will face is whether to run fund administration offices in-house, or partner with a third-party administrator in an outsourced or co-sourced arrangement.
In-house administration
An in-house fund administration model does offer managers with certain advantages:
1. Control and customization:
Keeping administration in-house does allow managers to keep full control of their fund accounting and reporting processes, and tailor these processes to meet a fund manager’s unique requirements.
Managers retain total control over how reports and accounts are produced in an in-house model and can access information as required to answer deal team and investor queries.
2. Confidentiality and responsiveness:
The direct access to data and reporting that an in-house model provides also gives managers the comfort of keeping sensitive data and reporting closely held and confidential. It also facilitates swift internal sharing of reports and figures, without the requirement to put a request in with a third-party provider.
3. Cost Benefits:
For some small managers, running an in-house fund administration team can save on costs if managers are still in the early stages of their development and minimum outsourcing costs don’t step down far enough for smaller operations.
For all the benefits that in-house administration offers, however, it also presents challenges that managers should factor into long-term planning for operational models.
Keeping fund administration becomes particularly challenging as managers grow in size, and locations/geographies, expand in new asset classes and consequently have to expand and upgrade their back-office infrastructure and technology to support this growth and at the same time still be in compliance with the increasing regulation framework.
Managers can soon find themselves incurring high, upfront capital expenditure as they make new hires to expand back-office headcount and bandwidth. Bringing in the required specialized staff to handle increasing compliance management and regulatory obligations are another obstacle to scaling an operational model at pace.
Moreover, investor due diligence often uncovers concerns when firms rely solely on internal resources for administration, as many investors view the absence of third-party involvement as a potential red flag. This lack of external validation can raise questions about transparency, operational rigor, and risk management, potentially impacting investor confidence.
Firms will also find that when they reach a certain inflection point, the cost benefits of keeping administration functions in-house start to erode, which is particularly important given that in-house staff costs are borne by the manager, whereas outsourcing costs are typically covered by the fund.
Further expenditure will also be required to keep space with the latest developments in technology. Running proprietary systems becomes costly and complicated to sustain as AUM grows, and installing and updating best-in-breed technology requires upfront investment in in-house technology expertise and systems monitoring.
The upshot for managers is that instead of investing in the core, front-office functions of investment talent and deal origination and deal execution tools, large sums of capital have to be set aside to keep back-office capabilities up to scratch.
Third-party administration
A third-party fund administration model can deliver cost efficiencies and specialist sector knowledge that would be challenging and costly to replicate in-house.
Advantages of an outsourced model include:
1. Access to specialized expertise:
Specialist third-party administrators operate across a number of jurisdictions and service multiple clients across a wide range of strategies.
They thus have the scale and global reach to build teams that are dedicated to regulation and compliance, are constantly monitoring regulatory developments across all key jurisdictions, and have the knowledge and expertise to ensure that clients are always compliant with all national and international regulation, and can avoid the risk of incurring penalties.
The expertise a third-party administrator can bring to the table is deep, as it employs highly skilled professionals with specific expertise and experience in the areas of fund administration, tax reporting, compliance, and risk management. It is difficult to provide similar specialism in an in-house model in a cost-effective way.
Another important consideration is that third-party administrators offer flexible access to these experts as needs arise, without the burden of full-time salaries. Instead of maintaining in-house specialists for infrequent or unforeseen issues, managers can tap into a dedicated pool of expertise on demand, ensuring cost efficiency while retaining top-tier support for “rainy day” scenarios.
2. Efficiency and cost savings:
When working with an outsourcing partner, managers free themselves from the costs and time required to keep on top of internal hiring and training, as well as the overheads that come with retaining large in-house teams.
Maintaining technology infrastructure is another area where the outsourcing option can save managers high capital expenditure outlays on technology.
Third-party administrators, with multiple clients, can spread operational, team and technology costs across their client bases, which enables them to provide best-in-class service at a lower cost point than a manager administering a small family of funds with an in-house operation but also ensuring best practices execution.
3. Helping a manager to scale:
It is also much easier for third-party providers – because of their scale – to ramp up service provision and managers not only build and expand their own platforms and investment strategies, but also adjust to the rising reporting and regulatory demands associated with growing their franchises internationally, serving a more diverse investor base and manage multi-jurisdictional compliance.
The hiring cycle and training required to upskill an in-house team to manage these growing demands will involve significantly longer lead times.
The scale and breadth of experience within third-party outsourcing providers also means that they will have the experience of handling complex fund structures and bespoke investor reporting requirements.
4. Stamp of quality:
Established outsourcing providers will be known to investors, who will take confidence in the fact that a manager is working with a third-party that has a track record in the industry and can be trusted to produce transparent, objective reporting. Using a third-party provider also means that managers can benchmark fund administration costs against the market, and show investors that a fund is receiving value for money
Outsourcing administrative functions to a third-party expert can also mitigate the risk of internal errors, operational blind spots and even fraud.
5. Top technology expertise:
Outsourcing partners will work across the best-in-breed alternative assets technology platforms and are able to advise on the selection and implementation of the fund reporting, risk management, and regulatory compliance software tools that are the best fit for a manager.
Building this expertise and breadth of experience in-house is challenging, as is meeting the ongoing development and maintenance costs required to keep these sophisticated software platforms functioning and up to date.
The benefits of scale also mean that third-party providers can make much larger investment in cybersecurity, data security, and business continuity plans than an in-house team could manage.
Industry pivots to outsourcing
Even though in-house administration continues to offer certain advantages, the scale, technology expertise and regulatory and compliance experience that a third-party solution can provide for managers has seen the industry pivot decisively towards the outsourcing option, with various industry surveys showing that outsourcing is on the up and expected to continue increasing in the years ahead.
For managers who are reappraising their operational models, it is important to take a long-term view on what their businesses will require in the future.
An in-house model does offer control and customization benefits, but as the reporting and regulatory workloads in back-office teams increase, scaling an in-house model cost-effectively and at pace becomes increasingly challenging.
The scale, technical expertise, technology bandwidth, cost benefits and global experience third-party providers bring to the table are encouraging more and more managers to choose the outsourcing approach when facing an organizational inflection point.
Alter Domus is a specialist fund administrator provider that has helped hundreds of managers to transition their back-office requirements to an outsourced model and has a proven track record of delivering comprehensive, scalable, and efficient services tailored to the bespoke requirements of alternative investment funds operating across a range of investment strategies in multiple jurisdictions.
In addition to core fund administration, Alter Domus also provides extensive audit and tax support, seamlessly coordinating with other financial service firms to reduce distractions for fund teams and allow them to focus on their primary objectives.
As firms face the mounting complexities of human capital management, evolving technology, intensive reporting, and stringent regulatory demands, Alter Domus helps managers carefully weigh the benefits of maintaining in-house functions versus partnering with an experienced third-party administrator.

Alter Domus’ Fund Administration Services
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Key contacts

Maximilien Dambax
Luxembourg
Group Product Head of Fund and Corporate Services

Nathan Rees
North America
Head of Tech Operations, North America Fund Services
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Analysis
The credit middle office: navigating complexity in a competitive market
Rising competition and the evolution of more complex credit strategies has obliged credit managers and lenders to sharpen their focus on middle office infrastructure capability.

Credit markets have changed profoundly since the 2008 fiscal crisis, with broadly syndicated loans (BSLs) and private credit replacing bank lending as primary sources of debt for corporate and private equity.
As banks tapped down lending activity in the aftermath of the 2008 credit crunch to focus on repairing balance sheets, BSL markets and successively private credit managers stepped in to fill the gap and have not looked back.
According to Preqin figures private debt assets under management (AUM) have increased more than four-fold during the last decade, and currently sit at approximately US$1.6 trillion. Leveraged loan markets in the US and Europe, meanwhile, have seen loan issuance more than double since 2015 to exceed US$1 trillion in the first half of 2024, according to figures compiled by law firm White & Case.
As private credit and BSL markets have grown, so has competition, and to differentiate their propositions, lenders and private credit investors have adopted more sophisticated and complex credit strategies.
Previously private credit and BSL would focus on servicing different borrower groups, but as strategies have evolved, head-to-head competition for the same deal opportunities has intensified. Pitchbook figures, for example, show that US companies refinanced more than US$13 billion of private debt in the BSL market during the first four months of 2024, a 180-degree flip from the second half of 2023, when most borrowers were refinancing BSL borrowings with private debt.
Market evolution drives middle office transformation
As competition across credit markets has ramped up, lenders have had to reappraise their middle office operational and technology infrastructure and ensure that the administration of the individual credits in their portfolios is efficient, accurate, and as frictionless as possible for borrowers and other key stakeholders.
In a crowded market, where borrowers have a wide pool of lenders to choose from, a reputation for best-in-class middle office service – including tasks such as loan accounting, loan agency, trade settlements, interest rate payments, borrower and lender communications and borrowing bases – can serve as a point of differentiation for companies and sponsors when selecting a credit partner.
The last 24 months of dislocation across credit markets have served to further emphasize just how valuable and important middle office capability has become for credit managers.
As interest rates have climbed, so have the costs of floating rate debt structures, which have added to the workloads of credit middle offices, which have in turn had to keep track of agency notices, rate resets and margin changes. Covenant compliance and loan amendment negotiations have also increased in volume as financing costs have climbed, directing further demands into middle office in-trays.
Managers and lenders that had been able to get through with lean middle office operations in bull-markets have had to reengineer middle office operations to keep up with the higher volumes of increasingly complex and important loan administration workloads.
Middle office support
Instead of hiring in much larger middle office teams and locking up cash in capital expenditure to keep pace with rising middle office workloads, credit providers can take advantage of the technical and technological expertise of an outsourcing partner to put in place a middle office model that is flexible and scalable.
Alter Domus, for example, has supported credit provider clients with comprehensive loan servicing and monitoring support for more than two decades, and has built up the specialized expertise and technology stack to cover the ever-intensifying technological and operational asks of middle-office credit teams.
All aspects of loan servicing needs can be handled by Alter Domus across our middle office service offerings:
- Our Loan Agency offerings via our Agency Services team allows us to serve in a variety of agency roles including named administrative agent, sub agent, successor agent, and more. In doing so, our teams handle jobs including counterparty communication, oversight of covenant compliance, and agency notices.
- Our Loan Services offerings provide an array of coverage including loan accounting, loan servicing, trade settlements, and CLO services. Our teams are perfectly positioned to take care of complex, time-consuming day-to-day workflows that are essential to the life of a loan.
- Our Loan Monitoring solutions provide digitized, normalized financial information from borrowers delivered to your monitoring solution of choice or our modern portal.
Our middle office servicing relies heavily on our proprietary administration platforms CorTrade, Agency360, Solvas, and VBO to support clients across a broad suite of accounting, modelling, and credit risk solutions. Alter Domus’ tech platform covers all these tasks, and others, with an interface that can operate within a client’s portfolio management system and process a wide range of reporting, data, and internal accounting functions.
When reviewing middle office infrastructure capability, it is also crucial for managers to ensure that the middle office links in to both the front and back office, and that teams in these three functions are not operating in siloes.
Each team will often use different systems, technology platforms and servicing teams to execute their core functions, but it is important that all functions are integrated, and that there is a secure, accurate data trail that can be traced from the beginning to the end of the loan lifecycle.
Our firm has leveraged our credit and technology expertise to help several credit providers build data bridges between the technology and software used in separate functions, and integrate data from preferred front-office, middle-office, and back-office platforms to ensure data veracity.
Working with a partner like Alter Domus enables credit providers to focus on their core business of originating opportunities, assessing risk, and underwriting new financings, confident in the knowledge that they have the middle office support in place to manage loan servicing tasks to the highest industry standards.
Analysis
How private debt managers can scale their success by optimizing their operational models
The private debt industry has experienced significant growth during the last decade and has delivered impressive performance throughout the rising interest rate cycle. With forecasts pointing to further increases in private debt assets under management (AUM) in the years ahead, private debt managers will have to upgrade their operational infrastructure to support their rapidly-expanding franchises and better connect front, mid, and back-office functions.

In what has been a challenging period for alternative investment managers, the private debt asset class has been a standout performer.
According to McKinsey, private debt generated stronger returns than all other private market asset classes in 2023 and was the most resilient for fundraising.
Rising interest rates benefited private debt firms, due to the floating rate structures that gains when base rates climb. This has driven ongoing investor demand for the strategy, proving its ability to deliver attractive risk-adjusted returns across the investment cycle.
The robust performance of private debt strategies through the recent period of market dislocation and uncertainty follows a period of remarkable growth for the asset class.
Private debt assets under management (AUM) have more than quadrupled during the last decade, according to Preqin figures, and currently stand at approximately US$1.6 trillion. And according to BlackRock, the private debt industry is well-positioned to sustain its growth trajectory. AUM forecast is set to reach US$3.5 trillion by the end of 2028 as borrowers continue to favor the bespoke and flexible financing structures offered by private debt managers, and investors, many of which are under-allocated to private debt, move to grow their exposure to the asset class.
Preparing for the next cycle of expansion
For private debt managers, the rapid increase in industry AUM has brought their franchises to an organizational tipping point.
Private debt firms are not only managing larger pools of capital for a more diverse, demanding investor base, but are also executing increasingly complex investment strategies that have expanded beyond bilateral, middle-market loans into big-ticket club deals and opportunistic purchases of debt tranches.
Unlocking capital from a global investor base and expanding deal pipelines into new areas have opened exciting opportunities for managers. However, capitalizing on these prospects will require private debt firms to upgrade their operational infrastructure to sustain their growth.
Managers have not only had to enhance their back-office fund accounting and investor reporting functions to serve an increasingly demanding and sophisticated investor base, but also their middle-office loan servicing and loan administration services to borrowers and the companies to which they lend.
The lean operations that supported private debt through its first phase of expansion will have to be upscaled to ensure that managers can maintain operational nimbleness, and the ability to measure performance while tracking risk, as transaction volumes rise.
Increasing middle and back-office capabilities do pose operational challenges for managers. Staff and technology costs ramp up, while the impacts of additional processes, sign-offs and internal bureaucracy can compromise the agility and responsiveness that have underpinned previous success and growth.
It has also become crucial for managers to establish seamless links between front-office dealmakers, middle-office, and client-facing teams that support borrowers, and back-office teams managing fund accounting and reporting.
Key areas for consideration
As private debt managers enter the next phase of the asset class’s evolution, there are three key questions that should be asked before embarking on an operational overhaul:
- Does integration exist through the front, middle, and back office?
While the oversight and investment management of a private debt fund does have similarities with other alternative asset classes such as private equity and real assets, there are specific deal structuring and fund accounting requirements that are unique to private debt.
Loan structures, for example, will include multiple tranches, varying rates and payments of principals and interest. Managers must also be able to source and analyze data in markets where public information is less available than in syndicated loan and bond markets.
The fund accounting required to track and report on private credit portfolios and investments is also vastly different from what is required in private equity portfolios, for example.
As managers expand, it is essential that their accounting and operating teams have the requisite experience to handle the specific demands of private debt fund accounting and reporting.
It is equally important for private debt managers to have the middle-office capabilities to take loan agency responsibilities, such as for individual investments, handle all trade settlements and interest rate payments, and to administer borrowing bases.
- Outsourcing or in-house?
Managers must decide if it is best to outsource both back- and middle-office functions as their operations grow or invest in building additional infrastructure in-house.
Keeping operations in-house gives managers direct control of loan operations, fund accounting, and data, which has its advantages, but does come with high upfront costs and makes it more difficult to scale up back-office resources in the future.
Outsourcing to a third-party provider allows managers to benefit from the global reach and extensive industry expertise of fund administration specialists. It is also important to factor in that when a manager ramps up the size of internal teams, the GP bears those costs. In contrast, when outsourcing, the costs of administration are covered by the fund.
If managers do choose to go down the outsourcing route, it is crucial to have clarity on what infrastructure and technology will have to be retained internally to oversee, engage, and interact with a third-party fund administrator.
Managers must also be clear on the scope of work that a loan servicer and fund administrator can handle. Not all partner firms, for example, can deliver portfolio accounting via their loan administration systems.
Managers should be clear on exactly what support they require and whether the administrator can meet that request.
- How will data challenges be addressed?
Data management poses distinctive challenges in a private debt context, as different teams within a firm have different technology and data requirements.
Investor relations teams, for example, want to access performance data to report to LPs, while operations teams prioritize the data requirements of investment professionals and fund accountants want to ensure that books are up to date.
This has seen the asset class move away from single systems, which aim to cover the full loan cycle and serve as a “single source of truth,” to a model where there is an interlinking patchwork of technology platforms and servicing teams.
As data linkages between different operations and teams grow in importance, the middle and back office must become more fluid and integrated.
Ensuring that the data linkages between these teams and their respective technology tools are fully integrated and seamless is complex and impacts how back-office and mid-office functions are structured.
Whether outsourcing or keeping operations in-house, firms must ensure that operating models are structured in a way that aligns the back office and middle office teams and helps to facilitate the “front-to-back” integration required to support multiple complex front office investment management tasks.
Curating an operating infrastructure that covers these priorities and meets the specific demands of each individual private debt manager lays a firm foundation for building a scalable operational model that can grow with a private debt platform.
The value of a supportive loan servicing and fund administration partner
Transforming an operating model is demanding and can distract managers from their core front office investment management priorities.
Working with an experienced servicing partner and tech provider like Alter Domus, which has extensive asset class experience, a clear understanding of how private debt managers work, and insight into the key operational priorities they are seeking to address as their organizations grow, eases implementation and ensures that managers are putting the right structures in place.
We have the resources and expertise to help private debt managers take their operating models to the next level by streamlining processes and harnessing technology, and have supported clients’ operational requirements in the following ways:
- Provision of a full suite of services
Alter Domus provides an end-to-end service to private debt managers that covers every operational requirement, including loan administration, portfolio accounting, loan agency, loan servicing, and fund administration, as well as full data integration across these functions.
- Technology expertise
Alter Domus has successfully implemented proprietary technology to support all its services. Alter Domus’s Solvas platform, for example, integrates accounting, modelling, and credit risk solutions to serve as our proprietary loan administration system.
This means Alter Domus can integrate data and operate within a client’s portfolio management system, providing regular reporting and data feeds that allow clients to update their internal accounting systems.
- Data integration
Alter Domus’s technology expertise means it can also support private debt managers with the design of technology stacks and operating models that support data integration.
We can help clients to connect the various preferred technology tools of their teams and facilitate the fluid movement of accurate data between different teams and across different technology platforms. This ensures that there is a golden copy of all data throughout the full loan and fund lifecycle.
Partnering with a firm like Alter Domus can help private debt managers to re-energize their focus on strategic growth and ensure that their support structures are agile and fit for purpose in a private debt asset class that continues to grow, develop, and become more competitive.
Key contacts

Greg Myers
United States
Global Sector Head, Debt Capital Markets
News
How Alter Domus welcomes new teams when providing back-office lift-out solutions to clients
Successfully partnering with customers to lift-out their back-office solutions and enable them to create their own efficiencies has been a hallmark of Alter Domus throughout its growth. Central to the success of these partnerships is how we welcome and integrate new teams and individuals into AD. In this article, Joanne Ferris, Chief Human Resources Officer at Alter Domus, outlines the people-centered approach AD takes to ensure that every new team that joins the firm via a lift-out or transfer has a first class employee experience before, during, and after transferring.

There are many benefits for asset managers when partnering with a service provider for a lift-out back-office solution, including gaining access to cutting-edge tech solutions, keeping pace with regulatory reporting demands, and providing their back-office employees with meaningful career paths and training in a larger organization closely aligned to their skillset.
Among the most crucial success factors in such a partnership is ensuring a continuation and improvement in back-office support, and retaining the expertise and experience of back-office teams as they are integrated to a service provider.
A welcoming new home for back-office teams
With a strong track record in successfully delivering lift-out solutions, Alter Domus has already become home to hundreds of employees who have joined the organization via lift-outs and strategic partnerships.
As Joanne describes it, “We are always excited and enthusiastic about welcoming new faces to Alter Domus. We understand that every career is precious, and that initially teams may be apprehensive about such a change in their working lives. Our approach centers around building trust and strong relationships through multiple in-person touchpoints at both a team and individual level to ensure transferring employees feel engaged and connected throughout the process.“
“Another key element of our approach is listening and engaging – what are people’s concerns or questions, what are their goals and ambitions, what would they like to see in their new environment – and adapting our approach based on the feedback we receive, and a deep understanding of their needs.”
We are proactive, responsive, and transparent with all of our customer’s teams who are involved in the project. It is critical to stay very connected with the customer, the team experiencing the lift-out, and the multi-disciplinary Alter Domus team managing the change. From a people perspective, we have two short-term priorities – ensuring impacted teams are supported, and the co-ordination and execution of integration to our systems, policies, payroll and other processes.
Joanne Ferris
Chief Human Resources Officer
Best in-class integration
As mentioned by Joanne, Alter Domus engage dedicated resources across multi-disciplinary functions to ensure a smooth start for new team members. This can include introducing teams to a possible new leader, a potential new workplace, new operating systems and tech, and integration to AD’s payroll, performance cycle, and other people processes.
Employees joining Alter Domus through a lift-out enjoy access to the Alter Domus onboarding app, individualized onboarding packs, as well as invitations to interactive info sessions on systems and processes, career pathing and performance at AD, the Alter Domus Academy and more.
At the same time, teams are introduced to the culture and ways of working at Alter Domus: “We meet teams on a regular basis before, during, and after the lift-out process, and showing who we are – our culture, our values as an organization, and how we work together – is something that we do every step of the way,” says Joanne. “We say that Alter Domus is a ‘second home’ for our clients, and AD is also a place where people feel they can grow and develop their careers when they join us.”
When teams join Alter Domus, they also take part in AD’s monthly engagement surveys from their first month. “Our engagement surveys are a key tool for AD leaders, allowing us to measure and proactively address employee sentiment,” says Joanne. “For teams joining via lift-outs, these are a vital metric for our leaders and project team. Most importantly, this can be a catalyst for great conversations within the team, and generate changes to how we do things.”
Providing a platform for growth
Moving from a back-office team to working within the core business of a service provider also brings benefits and opportunities for new joiners in a lift-out scenario. With a clear focus on best-in-class technology solutions and providing impactful learning and development opportunities through the award-winning AD Academy, Alter Domus provides team members with the resources and support to grow and develop their expertise and professional careers.
“We are proud of the opportunities we provide our people – professional qualification support as an ACCA accredited employer, LinkedIn Learning, internal mobility, and in-house specialized training from the AD Academy – and how these can benefit both new teams and our clients is part of our long-term success in lift-outs and partnerships,” says Joanne.
Measuring long-term success
As a high-performing metrics-driven organization, the initial focus is on ensuring the “hardwiring” – systems, processes, policies, hardware integration and workplace set-up – is complete. At the same time and beyond the initial stages, the teams will move on to more long-term metrics covering efficiency, performance, client satisfaction, and employee engagement.
For Joanne, another key metric is how new team members embrace the opportunity to grow and develop with us: “At Alter Domus, our success is built on the success of our people. Many of the people who have joined us via lift-outs have gone on to progress to more senior levels at Alter Domus, and this is the ultimate testament that our approach works for both our clients and for the new teams we welcome to Alter Domus.”
Strategic Partnerships
Extraordinary ambitions need extraordinary partners. Discover how Alter Domus’ collaborative and bespoke organizational design and implementation enhance our partner’s ability to generate alpha.

Key contacts

Joanne Ferris
Luxembourg
Chief People Officer
Analysis
Why modular operational models are crucial for effective fundraising
Private markets managers are more focused on upgrading their operating model than ever before, research from Alter Domus and Deloitte shows.
A best-in-class operating model, however, is not only an internal priority, and is increasingly becoming a factor in determining fundraising success.

The private markets industry has always been about returns, and while manager track record remains the main predictor of fundraising success, LPs are scrutinizing operating models in ever greater detail.
Private markets assets under management (AUM) have more than trebled during the last decade to around US$14.5 trillion, according to a Bain & Co analysis. With larger sums of capital having been placed in alternatives, LPs’ expectations have correspondingly increased to ensure managers have the operational scale necessary by providing reporting tools, data management, cybersecurity and operating frameworks to effectively manage the capital they are entrusted with.
From internal to external
The frequency and depth of operating model assessments have increased by LPs, and significantly impact their decision whether to ultimately invest. This represents the evolution of how private markets stakeholders consider the back-office and its contribution to a firm’s ultimate performance.
Initially, private markets firms started out as small, entrepreneurial, partner-led businesses that ran lean and leveraged the network and experience of small teams of dealmakers to source and execute deals. Additionally, back-office teams were small and the operating infrastructure simple, with email and spreadsheets sufficient to cover dealmaker requirements.
The pace of the private markets industry’s growth, according to Bain & Co has delivered a compound annual growth rate in AUM of 14% since 2013. With this growth has come an increased expectation, leading to GPs taking advantage of smarter back-office capabilities, technology, and operating models to their commercial advantage. Those that have made this investment have been at the forefront of capital raising.
Traditionally, managers focused primarily on deal origination and execution have seen how the the transformation of back-office functions of technology and data have shifted from being siloed to a key enabler of success in the front office.
An industry survey and report led by Alter Domus and Deloitte – “How technology empowers success in the alternative assets market” – shows that well over half of managers are already utilizing digitization and automation in daily operations, and that almost 63% anticipate that AI and GenAI will have a significant impact on the alternative investment industry.
When it comes to the priorities for integrating digitization, AI and GenAI into their firms, respondents ranked streamlining operational processes, enhancing decision-making capabilities, and increasing portfolio performance as the primary focus areas.
Operating models: a factor in fundraising
The deeper focus on operating models, however, is not exclusively driven by GPs seeking peace of mind that their internal operations and back-office set up are fit for purpose, but it has significantly increased in scrutiny from investors.
Fundraising has become more challenging, as the competition for LP capital is intensifying. Bain & Co analysis estimates that the gap between the capital sought by firms currently on the road, and the amount of capital raised in 2023, is sitting at 3.2x – the widest delta between supply and demand since the 2008 global financial crisis. Against this backdrop of a competitive fundraising market, where capital is at a premium, a best-in-class back-office operation can be the difference between an LP having the necessary comfort levels to make an allocation, or opting to pass.
The returns of a fund will always be the primary driver for investors, but increasingly are making decisions on more than this. In addition to factoring operations into reviews of front office capability, LPs are also raising the bar when it comes to reporting, compliance and technology.
This has resulted in greater scrutiny of a GP’s operating model and has put the back-office as a key element into the fundraising spotlight.
Additionally, areas such as cyber security, data management, software, ESG and business continuity have become priority areas for investors when conducting manager due diligence. LPs want to be sure that GP systems and processes are robust, and that managers have the frameworks in place to manage more complex and frequent investor reporting and closer regulation.
Shortcomings in any of these areas will be red flags for LPs, potentially presenting unacceptable levels of downside risk for investors who want to construct resilient portfolios of managers they can trust. Investors will also be interrogating whether a GP’s office has the scale and capacity to manage and take advantage of a more sophisticated menu of liquidity and funding options, whether that be secondaries, GP-stakes deals, NAV financing or co-investment and special accounts.
The industry has matured and evolved, and LPs want to be sure that GPs have the required operating toolbox available to navigate a more demanding operational landscape for private markets managers.
The automation and digitization of the back-office has emerged as a key capability for meeting investors demand for more frequent, detailed reporting and a robust operational model.
Indeed, the Alter Domus and Deloitte research showed that GPs now see workflow tools and automation infrastructure as influential factors when selecting fund administration partners, with 75% saying it will have either a moderate or strong impact on fund administrator selection for investment managers.
Best practice operations
Upgrading operational models and back-office infrastructure to gain traction with investors when fundraising requires planning and upfront investment can prove challenging for GP senior leadership teams who are focused on front office investment functions.
For managers that have their fund administration, fund accounting and technology stack inhouse, closer LP scrutiny of manager operating models can be particularly testing, as scaling up technology platforms and back-office headcount can require capital expenditure running into the double-digit millions – investment that otherwise could go into the front office capabilities of sourcing deals, deploying capital, managing portfolios and taking companies to exit.
As the operational, reporting and fund administration demands on inhouse back-office teams ramp up, partnering with a third-party fund administration provider can help managers to address the growing LP focus on operating models and back-office infrastructure without compromising on the core business of investment management.
Automation and digitization expertise is a key area where administrators can add significant value by making proprietary automation technology tools (that would be prohibitively expensive for investment managers to build and fund in-house) readily available to GP clients.
Alter Domus, for example, has made significant investment in data analytics, workflows and automation. These tools have helped GP clients to drive significant efficiencies in their middle and back-office teams.
The technologies can be scaled up with managers as they grow, and not only drives efficiency, but also makes audit trails more robust and enhances data accuracy.
In addition to supporting clients with automation and digitization, fund administrators servicing thousands of private markets funds globally have been exposed and poised to make substantial and continuous investment in their platforms, and to provide effective fund accounting, fund administration and investor reporting solutions that can be benchmarked against peers.
Global fund administrators are well-versed in regulatory and reporting changes and have the expertise, footprint, and experience to support the ongoing client’s needs as compliance, ESG and regulatory obligations increase.
Technology partners
Fund administrators are also increasingly providing managers with views on technology and software, leveraging industry software expertise and relationships with technology vendors to curate technology platforms that dovetail with specific manager requirements.
Indeed, fund administration is changing from simply providing outsourced fund accounting into technology best practices, where managers turn to fund administration for experience and knowledge on how their operations can implement and harness technology to its fullest potential within the framework of a modular operation model.
In the Alter Domus and Deloitte survey more than two-thirds of respondents said they expected fund administrators to play a meaningful role in assisting managers with the adoption of new technologies such as AI, GenAI, and digitization. Some 38%, meanwhile, expect their relationship with fund administrators to become more strategically vital when adopting new technologies.
Putting managers on the front foot
The support that fund administrators can offer on technology and back-office infrastructure can help to put managers on the front foot when fundraising, and give LPs the comfort that operations are being well-run by experienced industry specialists and can be scaled as managers grow their franchises.
Global fund administration businesses, that LPs are familiar with, can be a reassuring presence through a fundraising process and serve as a kitemark, signalling that managers are delivering best practice across reporting, accounting and compliance. LPs will not invest just because a manager has the best operating model and technology platform in place – manager selection will always ultimately come down to performance.
In a maturer and more sophisticated industry, however, even the best performers have to prove to LPs that their organizations are operationally robust and have the back-office infrastructure in place to deliver deals, report to accurately and timely to investors, and comply with regulation.
Key contacts

Maximilien Dambax
Luxembourg
Group Product Head of Fund and Corporate Services

Nathan Rees
North America
Head of Tech Operations, North America Fund Services
Analysis
What makes a good fund administrator?
Fund administrators provide essential accounting, reporting, regulatory, and technology support alternative assets managers.
But what makes a good fund administrator and what should private markets managers look out for when selecting a fund administration partners?

The fund administration industry has undergone a remarkable transformation during the last 20 years.
Fund administrators have evolved from niche divisions within banks and accountancy firms into fast-growing, independent platforms with global footprints and growing pools of assets under administration (AUA).
What is fund administration?
Fund administration involves the management and delivery of core back and mid-office functions for alternative asset funds.
Fund administration responsibilities include:
- Fund accounting
- Financial and investor reporting
- NAV (Net Asset Value) calculations
- Managing capital calls and distributions
- Fund compliance
- Regulatory assistance
- Audit and tax support
- Anti-money laundering (AML)
- Investor services and onboarding
- Technology and advisory services
What makes a good fund administrator?
But what makes a good fund administrator, and what qualities should private markets managers consider when selecting a fund administration partner?
Here are seven key qualities to look out for when assessing a fund administrator:
1. A client-centric approach
A good fund administrator will be able to curate bespoke operational models that address specific client priorities and needs.
Good fund administrators will have deep industry knowledge of the key alternative asset classes, including private equity, real assets and private debt.
Fund administrators will understand the operational requirements of private markets managers in these asset classes, and be up to date on the fluid regulatory backdrop they operate within.
Rather than limiting clients to basic, off-the-shelf packages, client-focused fund administrators will provide tailored fund solutions that reflect an understanding of each manager’s investor relationships and their financial and investor reporting priorities.
Personalized fund administration services, supported by industry knowledge and excellent client relationship management, can enhance fund administration by improving accuracy, speed, and efficiency.
2. Accuracy and attention to detail
Investor demands for more frequent, detailed and bespoke information, coupled with the fact that investor bases are more global and diverse, has made it essential for private markets managers to exercise meticulous, accurate record keeping to stay on top of their operations and investor expectations.
A good fund administrator is detail-oriented and consistently delivers timely, precise financial statements and accurate fund reporting.
Error-free fund management differentiates alternative asset managers to their investors, and allows them to spend more time discussing investment performance, rather than clearing up errors and delays. It is the fund administrator’s role to facilitate this.
3. Leading on technology and innovation
Technology is a key enabler for enhancing fund administration and processing the rising volumes of granular investor and regulatory reporting efficiently.
The best fund administrators have deep technology expertise, and a proven track record of using fund administration technology to drive the efficiency, accuracy and responsiveness of their service provision.
Effective fund administrators will also be using their technology stacks to provide innovative fund administration solutions – such as co-sourcing models – to dovetail their services with precise client requirements.
A good administrator should also have exceptional understanding of the market-leading fund accounting software platforms – including Yardi, eFront, Allvue and FIS Investran – and be able to implement and tailor these platforms for clients.
4. Regulatory compliance and risk management capability
Adherence to financial regulations and legal compliance are an essential ‘license to operate’ for private markets managers, and any shortcomings in these areas can have serious implications for investor relationships, fundraising and access to capital markets.
It is of critical importance that an alternative asset manager’s fund administrator has a comprehensive understanding of all relevant laws and regulation, including anti-money laundering (AML) rules and the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS). The provision of rigorous fund compliance services, compliance audits and fund governance best practice are also essential capabilities.
In addition, a good fund administrator will conduct proactive fund risk management as a matter of course, anticipate risk across all of a client’s fund operations, and put appropriate risk mitigation strategies in place.
5. Providing ancillary services around fund administration
The core capabilities of the fund administrator are fund accounting and investor reporting, but market-leading fund administrators will be able to leverage their expertise in these areas to provide clients with a much deeper and sophisticated range of investor services.
As managers increasingly look to outsource back-office functions, scale operational infrastructure, and benchmark operating costs, administrators can assist managers with tax services, corporate and secretarial services, treasury, performance measurement and the provision of Alternative Investment Fund Manager (AIFM) and depositary support.
Fund administrators will also be able to leverage their technology expertise to provide counsel to clients on fund accounting software choices, automation and operating models, as well as provide access to internal, proprietary technology that could assist clients with rising reporting demands.
6. Global reach and local expertise
Private markets investor bases are more diverse and global than ever, and in order to service their investors, managers require an understanding of the variations in fund law and operations across different jurisdictions.
Fund administrators with a global footprint and “boots on the ground” in key fund jurisdictions are able to combine local knowledge with a global perspective, and service clients wherever they are based, and service funds wherever they are domiciled.
For private markets managers this provides coverage and peace of mind that would be incredibly difficult to replicate with a back-office team operating out of a head office in a single country.
7. Communication
A fund administrator’s technical excellence should be combined with outstanding stakeholder communication skills, clear fund reporting practices and total transparency on the fund administrator’s working practices and processes.
A good fund administrator will have high levels of customer satisfaction and be able to evidence this with positive net promoter scores. They will be passionate about fund services and continue investing in their businesses to provide clients with high value, tech-enabled services.
Openness and transparent communication are the foundation upon which good fund administrators retain clients and talented staff, and maintain consistently high levels of service delivery.
Key partners for the alternative investments sector
As the alternative investment industry matures, its regulatory, reporting and operational obligations are becoming more complex and demanding.
Alternative assets managers are increasingly turning to fund administrators to shoulder the load with them to be operationally successful.
A good fund administrator will have the expertise and capability to add significant value for clients by bringing deep industry knowledge across real assets, private equity and private debt to the forefront, and combine this with a client-centric approach, accuracy, deep technology expertise and broad range of services provided from a global network of offices.

Alter Domus’ Fund Administration Services
Our 4,500 global experts specialize in alternative funds, providing advanced services to help you navigate complexity, streamline operations, and stay ahead of the competition.
More insights:
Migrating your fund? What to consider when changing your fund administrator.
Alter Domus explores the essential considerations and strategies for GPs to ensure a smooth transitions to a new fund administrator.


In-house vs third-party fund administration?
Private markets growth raises back-office demands – should fund administration be in-house or outsourced? Alter Domus weighs the options.
What is fund administration?
What is fund administration, what services do fund administrators provide and how do they assist private fund managers? We explore.

Key contacts

Maximilien Dambax
Luxembourg
Group Product Head of Fund and Corporate Services

Nathan Rees
North America
Head of Tech Operations, North America Fund Services
Analysis
What is fund administration?
What is fund administration, what services do fund administrators provide and how do they assist private fund managers?

The rapid growth of the private markets industry during the last 15 years has supported growing demand from alternative assets managers for middle and back-office support and expertise to support their expanding franchises.
The fund administration sector has been a crucial service provider to managers seeking middle and back-office assistance, but what exactly is fund administration and what services do fund administrators provide?
What is fund administration?
Fund administration involves the third-party provision of middle and back-office services to private equity, private debt, real assets, venture capital and hedge funds.
Managers of these alternative asset funds will rely on fund administration service providers to manage their middle and back-office services requirements so that they can focus on their core, front-office functions of sourcing and executing deals, managing portfolios, securing exits and delivering returns for investors.
Tasks that fund administrators will manage for alternative asset managers include:
- Fund accounting
- Financial and investor reporting
- NAV (Net Asset Value) calculations
- Managing capital calls and distributions
- Fund compliance
- Regulatory assistance
- Audit and tax support
- Anti-money laundering (AML)
- Investor services
- Technology and advisory services
What are the benefits of fund administration?
Outsourcing back-office functions to a third-party fund administrator has become more important for alternative assets managers as the industry has grown, and regulatory, compliance and investor demands have increased.
The private markets industry started out as a small, niche asset class, led by entrepreneurial teams of dealmakers who ran their firms with small back-office teams and simple IT infrastructure.
As private markets assets under management have significantly increased, similarly the demands on the operational infrastructure of managers and firms have intensified. Managers require much larger back-office teams and more robust technology platforms to service a larger, more global and sophisticated investor base.
Working with an established fund administrator means that managers can address these rising demands without having to invest large sums of upfront capital expenditure in back-office infrastructure, and take advantage of the global reach, economies of scale and technology infrastructure of specialist fund administration providers.
What are the primary functions of a fund administrator?
The role of the fund administrator is to assist clients by managing the tasks related to fund accounting, investor onboarding and reporting, compliance, and regulatory obligations, while ensuring that all requirements are met on behalf of the firm.
When working with a trusted fund administrator a private fund manager can rest assured that all fund accounting is timely and accurate, that the issuance of capital calls and distributions to investors are prepared, coordinated and delivered, that investor reporting and portal requirements are fulfilled and and that their fund is in compliance with regulatory, know-your-client (KYC), know-your-transaction (KYT), and anti-money laundering (AML) obligations.
A fund administrator’s primary responsibilities will include:
- Fund accounting
- Investor, regulatory and tax reporting
- NAV calculation
- Capital call and distribution management
- Cash management
- Financial statement preparation
In addition to performing core back-office functions and assisting the manager in meeting the obligations outlined in fund documents, a fund administrator can leverage its experience and scale to offer additional, related services that add further value.
Other services fund administrators will provide include:
- Transfer agency
- Performance measurement
- Risk management
- Fund formation / set-up assistance services
- Custody services
- AIFM services
- Corporate governance
- Software and technology solutions
- Compliance services
- Investor services and communications
- Audit and tax support
These services can free up additional in-house resources, help managers to provide additional financial information to investors outside of set reporting periods and give investors comfort that a manager has strong, comprehensive operational infrastructure in place to support their firm.
Technology and software services are one particular area where there has been a transformation in additional value a fund administrator can offer.
Technology has become a crucial enabler for faster, more comprehensive reporting that investors and regulators require.
Fund administrators, who work with multiple clients across a wide range of asset classes and jurisdictions have built up invaluable experience and knowledge of how to implement configure best-in-breed industry software and help managers to select the best software and technology to meet their bespoke requirements.
This is one example of how the value and services a fund administrator can provide expanded value beyond the foundational disciplines of fund accounting and investor reporting.
What teams are involved in fund administration?
In order to deliver the various services, fund administrators draw on the expertise and skills of a wide range of professionals.
The teams of professionals comprising fund administrations teams will include:
- Accountants
- Compliance officers
- Investors relations specialists
- Tax advisers
- Cash managers
- Corporate services teams
- Regulatory experts
- AIFM managers
- Depositary services teams
The depth and breadth of skills required to manage fund administration is difficult for managers to replicate in-house. Outsourcing to a third-party provider that has economies of scale and can offer professionals with career development opportunities can be a much more efficient way for a manager to access these skills and knowledge.
What are the different requirement for different managers?
Some managers will be raising their first funds or only be managing one or two funds, while other managers will be managing multiple funds across a range of private markets strategies. Fund structures can also vary in complexity and size.
Different investors will also have different requirements. Some investors will demand frequent reporting and portfolio analysis, while for others quarterly reporting will suffice.
Fund administration services can be tailored to the specific requirements of individual managers and their investors.
Fund administration models will also vary by asset class, and each asset class will have its own specific fund administration requirements:
Private equity, real estate & infrastructure and private debt are the main asset-class specific fund administration models.
There requirements are as follows:
Private Equity:
- Capital call management
- Distribution processing
- Waterfall calculations
- Deal structuring
- Aggregate valuations
Real Estate & Infrastructure:
- Property valuation services
- Real estate asset management
- Lease administration
- Property acquisitions services
- Real estate financial reporting
- Asset management
- Infrastructure valuation services
Private Debt:
- Loan servicing and administration
- Debt fund compliance reporting
- Private debt portfolio management
- Covenant monitoring services
- Credit risk assessment
A stamp of assurance for investors
For private markets LPs the knowledge that a manager has an experienced fund administrator in place provides confidence.
LPs will be familiar with the leading fund administration providers and can ease due diligence requirements knowing their operational knowledge, processes, technology and cybersecurity.
A credible fund administration provider can give a manager’s LPs, who are investing for the long-term, the comfort that a manager has a robust and scalable operational model in place that has been tried and tested.
LPs can leverage third-party administrators to support them in navigating the everchanging regulatory landscape and help them provide transparent and accurate reporting efficiently. Managers working with fund administrators can also benchmark their fund administration costs against market rates, further strengthening investor confidence that back-office functions are not only robust, but also economic.
Fund administration: a key partner in a mature industry
The private markets industry has grown and matured over the last decade, and the expectations of managers when it comes to fund accounting, investor reporting, and regulatory compliance have intensified.
Managers do have the option of keeping these functions in-house and investing significantly in back-office teams and operational infrastructure to keep pace with increasing back-office expectations. For managers that want to focus on the core business of investment management, however, third-party fund administration has become an essential service that frees up managers to focus on creating value for its LPs by doing deals and growing their franchises, all by knowing an administrator provides knowledge that their operations are secure and that they count on the support of the administrator’s reporting and regulatory teams to navigate the various regulations in the jurisdictions a manager is operating in.
If you are a manager seeking back office, technology and operational support, Alter Domus’ Fund Services team is available to discuss how you can future proof your operational model, simplify your back-office infrastructure and harness technology and best-in-breed industry software to its fullest potential.

Alter Domus’ Fund Administration Services
Our 4,500 global experts specialize in alternative funds, providing advanced services to help you navigate complexity, streamline operations, and stay ahead of the competition.
Learn more:
Migrating your fund? What to consider when changing your fund administrator.
Alter Domus explores the essential considerations and strategies for GPs to ensure a smooth transitions to a new fund administrator.


In-house vs third-party fund administration?
Private markets growth raises back-office demands – should fund administration be in-house or outsourced? Alter Domus weighs the options.
What makes a good fund administrator?
Fund administrators provide essential accounting, reporting, regulatory, and technology support alternative assets managers. But what makes a good fund administrator and what should private markets managers look out for when selecting a fund administration partners?

Key contacts

Maximilien Dambax
Luxembourg
Group Product Head of Fund and Corporate Services

Nathan Rees
North America
Head of Tech Operations, North America Fund Services
Keynote interview
Honing operating models to capture growth opportunities
Greg Myers shared his insights in September’s PDI US Report about how how experience is key in choosing the right operating model

Interview
Q Given the rapid growth of private credit, what do managers need to consider when shaping their operating models to take advantage of new opportunities?
There are a number of considerations – not only the outsource versus insource question, and which systems and technologies to engage, but also the allocation of costs. Typically, overheads and internal staff are paid for by the management team whereas fund expenses or middle office administrative costs are borne by the funds themselves. Attempting to reach that balance with the right oversight and the correct cost allocations is a challenge, as is how much control you want over the entire system. Oversight and control can take many forms, managers need to ask themselves whether it is enough to have a small staff overseeing a provider, or whether building an entire oversight operation that oversees everything done by a provider would serve their interests better. Similarly, private credit has far more moving parts than exists in bonds or equities. Obviously, the oversight and investment management is similar, but loans are more complex with multiple tranches, different rates and payments of principal and various sources of income that need to be tracked. Added to that, the information ecosystem that exists for broadly syndicated loans isn’t there for private credit, so you may be in a small group of lenders where the data is not easily recovered, creating its own problems.
The choice of operating model also depends on the size of the manager and their level of experience. The infrastructure required for private credit operations and accounting is very different to private equity. In credit, you need the ability to track portfolios that are very dynamic – an entirely different skillset for accounting and operations staff . Investors now typically require a fund administrator, so the question really is what level of infrastructure is needed to engage and oversee your chosen administrator. At Alter Domus, we use a number of systems. We own innovative technology such as Solvas, which offers integrated accounting, modelling and credit risk solutions, alongside a licensed loan administration platform called Sentry. This means we can support from inside a client’s own portfolio management system – integrating data and sometimes even operating from within the client’s systems. All these options feed into our fund accounting systems, which provide managers and investors with regular reports – either on a monthly or quarterly basis. Clients receive data feeds so they can update their own internal accounting systems. Some clients are very light touch and comfortable with an outsourcing model; others run a full internal operations team that tracks what we are doing daily. There is a cost implication to the latter, but we work to what our clients need.
Q What should managers look at when considering outsourcing versus insourcing options?
Not all fund administrators offer portfolio accounting in their loan administration system, but at Alter Domus, we find that it is key to the core team having enough understanding to be able to check daily. Whether you opt to outsource or run your own team, experience is key, something which we have found is getting harder to find amid the talent squeeze that exists within running private credit operations. Finally, I’d highlight the value in an organization’s ability to manage and track data internally and whether they have the requisite software and IT systems that can support substantial data.
Q How can managers maximize opportunities around technology to support their operations?
We have found that a lot more managers opt for co-sourcing arrangements today, meaning we do the work on their systems. They can trust that they have full transparency and access to everything we do, as well as the ability to seamlessly access the underlying data that we work with. This is becoming the preferred model and more commonplace, as managers can achieve greater efficiencies when they don’t have to manage or hire staff – they are making the investment in the technology but not the headcount.
We have completed several successful lift-outs over the past few years when we took on the staff and cost from a client and updated their systems. In doing this, we construct a revenue model that makes sense for the manager, while giving their people a career path that they might not have access to if they stayed at the fund manager. It is much more important to investor today that they have access, through their manager, to all their underlying portfolio data, so it often makes sense for managers to own that IT infrastructure.
Q What should GPs prioritize for data integration?
Within each GP, there is often a struggle between constituencies. Investor relations teams want a whole set of data around performance and what they can put together for investors; operations teams need enough access and availability to analyze data and satisfy investment professionals; the front office wants feedback on performance of the portfolio assets, and the accounting team need to make sure the fund books and internal books of the manager are up to date. There is no single system that does all those things and satisfying all of those constituencies is huge task. Many of our clients will focus on one aspect first before moving forward with others, depending on their own priorities.
Q How are both LP and regulatory demands likely to evolve going forward, and what can managers do to future-proof their approaches?
It is always risky to speculate on this, particularly in the US, given the political backdrop of a presidential election year. What is clear is that there will be an even greater increase in regulation and oversight down the line, as legacy private credit was historically handled by regulated banks and institutions. Despite the overruling of the SEC regulations, we expect an increase in adoption of the practices and disclosures recommended in them, as well as a heightened focus on how private credit operates with investor money being lent to private companies. Understandably, LPs want more and more. The operational data that we help clients prepare for the more sophisticated LPs is increasingly time-consuming, with requirements for everything from information safeguards through to physical office security. The detail required in these requests is also getting more and more granular. Managers need to have a highly robust framework in place to ensure their internal infrastructure can meet those demands. That means thorough change management investment underwriting and oversight processes, and partnering with service providers that have corresponding policies and procedures. Even more investment is going to be needed into compliance infrastructure, or in partnering with others that have made that investment in a way that can be relied upon.
News
Alternative assets at mid-year
Our sector heads Tim Toska (Private Equity), Greg Myers (Private Debt), Anita Lyse (Real Assets), give their first-half reviews as well look ahead at potential game plans for the second half of the year.

Private Equity in H2 2024: a waiting game
Tim Toska
Global Sector Head, Private Equity
What to watch out for H2 2024:
- Slower than expected rate cuts have kept the PE industry in a holding pattern for the first half of 2024
- Secondaries markets and continuation fund deals will remain a crucial source of liquidity through the rest of the year as deal markets adapt to a “higher for longer” rate environment
- The reopening of the IPO window and a cluster of high-profile sales to strategic buyers raise hopes that exit market are showing green shoots
- A two-tier fundraising market is emerging as investors waiting on distributions focus new fund allocations on a select band of managers
The rebound in private equity M&A and fundraising anticipated at the beginning of 2024 has yet to materialize, but dealmakers remain hopeful that momentum will build in the months ahead.
The PE industry entered 2024 on the back of a challenging 24 months where buyout and exit deal value declined for two consecutive years as inflation and rising interest rates drove up deal financing costs, decreased appetite for risk and spark dislocation in pricing expectations between buyers and sellers.
At the end of 2023 hopes built that cooling inflation would lead to a series of interest rate cuts in 2024, the first coming as early as May 2024, but hawkish central banks have been reluctant to cut rates early, with the US Federal Reserve signaling that there may only be one interest rate cut this year.
Deal activity green shoots
Slower than anticipated rate cuts have put the expected rally in PE deal activity on hold, but even though many dealmakers have opted to sit tight through the first six months of the year, buyout and exit activity has shown some early green shoots, putting the market in a better position than it was 12 months ago.
According to White & Case figures, global buyout deal value for Q1 2024 came in at US$165.73 billion, ahead of the US$144.65 billion posted in Q1 2023. Exit value also improved year-on-year, but only marginally, up from US$57.48 billion in Q1 2023 to US$59.17 billion over the first three months of this year.
A rally in equity markets and the reopening of the IPO market have helped to kickstart PE exits back into life, according to Bain & Co, with jumbo IPOs such as EQT’s US$2.6 billion listing of Galderma Group delivering large exits for managers.
There can be no arguing, however, that exit markets will have to build more momentum in coming months to clear backlogs of unsold companies and improve distributions to LPs.
Bain & Co analysis of funds at 25 of the world’s largest buyout firms shows that the number of portfolio companies held by managers has doubled during the last decade. Managers will be hoping that deal markets fully reopen sooner rather than later so that portfolio companies can be exited and distributions to LPs improved.
Flat fundraising
A rise in exit activity and distributions to LPs will be a catalyst for improving fundraising conditions. According to PEI’s Q1 2024 private equity fundraising report, fundraising over the first quarter of 2024 slipped to US$176.7 billion, down from US$195.5 billion in Q1 2023 and the third-lowest quarterly total since 2019.
LPs haven’t turned off the taps completely. EQT, for example, hit the €22 billion hard cap for its latest flagship fund (and largest ever) early 2024, with other blue-chip names including Cinven, BDT Capital Partners and Apax Partners also closing new flagship funds in the first half of 2024.
With a cohort of big names scheduled to wrap up funds that are currently on the road in the coming months, PEI anticipates that fundraising numbers will improve through the course of the year. This, however, does not mean that fundraising is getting any easier, with a two-tier market emerging as investors focus on making allocations to select managers, while other firms have had to spend longer on the road to coral sufficient support.
Alternative liquidity routes provide breathing room
The slower than hoped for reopening of traditional exit markets has been mitigated by steady activity in the secondaries space, which has continued to provided managers and LPs with opportunities to take liquidity and keep the PE ecosystem ticking over.
According to PJT Partners, secondaries deal volume was robust in Q1 2024, climbing by around 20 percent year-on-year as LPs continued to turn to secondaries markets to realize portfolio assets in a low distribution environment.
A surge in exits via continuation fund structures have also provided a welcome source of liquidity, as managers take up opportunities in a flat exit market to put prized portfolio companies into continuation funds that provide investors with the option to take cash proceeds or retain exposure. According to Pitchbook, 27 continuation fund deal progressed in Q1 2024, more than double the 13 continuation funds deals posted in Q1 2023. Some managers also continue to explore other novel options to unlock liquidity for investors, with NAV finance (where managers take out loans against fund assets) one pathway that has been used to fund distributions.
Patience required
Alternative routes to liquidity are expected to remain a busy area of the market through the second half of 2024, but managers who have had assets lined up for sales through traditional exit routes will be hoping that deal markets do finally reopen.
Big exits such as the US$18.25 billion sale of roofing supplier SRS Distribution to The Home Depot by Leonard Green & Partners and Berkshire Partners do point to signs of strategic sales defrosting. With buyout managers sitting on US$1.1 trillion of dry powder, secondary buyout activity will also have to increase eventually.
Deal markets may be a long way off matching the red-hot activity levels and valuations of 2021, but managers will only be able to hold off on new investments and exits for so long.
As stakeholders accept that interest rates will be higher for longer, and recalibrate pricing expectations and risk appetite accordingly, deal markets should fall back into balance and get the PE industry moving in earnest again.

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Private Debt in H2 2024: back to basics
Greg Myers
Global Sector Head, Debt Capital Markets

What to watch out for in H2 2024:
- Private debt managers will see steady deal flow and opportunities to underwrite deals at attractive yields – but competition is intensifying
- Loan margins will compress as banks return to market and syndicated loan markets reopen
- Defaults in private credit will start to climb, putting more pressure on lender portfolios
- Market consolidation is anticipated as scale becomes increasingly important for deal origination and managing stressed and distressed credits
Private debt has been one of the few beneficiaries of climbing interest rates, but while attractive risk-adjusted returns remain on offer, deploying capital will be more challenging the months ahead.
Through the course of 2023 banks and syndicated loan investors pulled back from underwriting in the face of economic uncertainty and rising interest rates, leaving the way open for private debt funds to gain market share and finance larger tickets. According to Barclays, private debt managers financed 84 percent of US middle market leveraged buyouts in 2023, the highest market share in decade.
Private debt managers have not only gained market share, but have also been able to secure highly attractive risk-adjusted returns. With base rates climbing to above five percent, the typical floating rate structures used in private debt loans have produced yields of around 12 percent, according to analysis from FS Investments, putting the class in a position to produce equity-like turns with lower risk.
Margins compress as competition intensifies
Looking ahead to the rest of 2024 and into 2025, slower than anticipated rate cuts will see private debt managers continue to source deals with attractive yields, but the strong tailwinds that carried the asset class in 2023 will begin to ease.
Peak interest rates coupled with soft landings for the US, and European economies have seen momentum return to syndicated loan markets, with banks and investors moving to regain market share ceded to private debt players during the last 12 to 18 months. US leveraged loan issuance was up 63 per cent year-on-year in Q1 2024, while European leveraged loan markets showed gains of 50 per cent year-on-year for the first quarter, according to White & Case figures.
As syndicated loan markets have reopened, borrowing costs have edged lower, with White & Case reporting tighter margins in both US and European leveraged loan market.
Margin compression has filtered into private debt as managers have encountered more competition. Bloomberg reports that average margins for private debt loans issued during the last 12 months have come down by 0.5 percent when compared to margins on loans issued between one and two years ago.
This is by no means a disaster for private debt (direct lending activity remains robust, and issuance has continued to grow through the course of 2024, but tightening margins do point to narrower yields in a more competitive market where private debt managers don’t have it all their own way.
As competition intensifies, private debt managers are expected to sharpen focus on their core middle-market lending franchises. As the large cap end of the market sees more competition, managers will see more flow in the less liquid middle-market, which more insulated from the resurgence in syndicated loan issuance.
Lending to borrowers with Ebitda of less than US$100 million will be an active and attractive part of the market for private debt managers, as there is less competition from syndicated loans for these smaller credits, giving managers more scope to protect margins.
Dealing with defaults
In addition to navigating more competition and tighter margins, the next 6-12 months are also expected to see private debt funds encounter more stress and default risk in current portfolios.
S&P Global Ratings notes that while deal flow remains abundant for private debt managers, defaults and negative ratings are forecast to climb to multi-year highs in 2024, testing portfolios and returns.
An uptick in private debt default rates would place a natural check on the rapid growth of the private debt industry over the last five to 10 years. Investors allocated more than US$200 billion to private debt from the start of 2021 to the beginning of 2024, according to S&P, growing the industry into a US$1.7 trillion asset class.
This has seen the number of private debt managers proliferate, with Preqin tracking more than 1,300 private debt managers in North America alone. Bank retrenchment, low defaults and high yields have created a ‘goldilocks’ environment for new entrants, but as these favorable drivers moderate, a winnowing of the market is set to follow.
Value of scale to drive consolidation
Established managers with proven track records, who have built platforms of scale, will be well positioned to navigate this shift in market conditions.
Smaller players, however, who do not have the scale and fee income to invest in deal origination and distressed credit workout infrastructure will find it more difficult to source transaction flow and protect portfolio value in a more “normal market”.
Big platforms also benefit for the ability to run multiple strategies, such a distressed debt and specialty lending, alongside direct lending, which is the largest strategy in private credit, but is also the most competitive. Firms with more than one strategy are more diversified and have a wider range of options when it comes to raising and deploying capital across economic cycles.
The emerging bifurcation between large private debt platforms and smaller firms is set to lead to a period of consolidation in the asset class, as smaller managers move to team up with larger private markets peers, and big platforms leverage acquisitions to grow assets under management (AUM) and broaden out into new geographies and investment strategies.
Private debt continues to offer attractive yields and protection against downside risk, but scale and track record will become increasingly important as predictors of manager longevity and performance in the months and years ahead.

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Real Assets in H2 2024: holding Steady
Anita Lyse
Global Sector Head, Real Assets
What to watch out for in H2 2024:
- Real estate and infrastructure portfolios hold steady in high-rate environment
- Deal activity and fundraising tepid as anticipated rate cuts decline
- Fast-approaching debt maturities will absorb GP bandwidth
- The long-term megatrends of ESG and decarbonisation will drive sustained growth and investment opportunities
Slower than anticipated interest rate cuts have tempered hopes for a revival in real assets investment activity and fundraising in the first half of 2024.
Global infrastructure and energy asset M&A registered a 24.3 percent year-on-year decline in the first quarter of 2024 according to IJGlobal; while JLL recorded a 6 percent year-on-year decline in global real estate direct investment in Q1 2024, and a 34 percent decline on a trailing 12-month period.
Fundraising has been equally challenging, with real estate funds only raising US$19.8 billion in Q1 2024, the lowest quarterly takings since 2011, according to PERE. Infrastructure fundraising performed better, climbing from US$8 billion in Q1 2023 to US$27 billion in Q1 2024, according to Infrastructure Investor. The strong rally in Q1 2024, however, masks what was still the second-worst first quarter for infrastructure fundraising in five years, and the fact that many of the managers that closed funds in Q1 only did so after lengthy periods on the road.
Steady performance and a brightening outlook
Real assets portfolios, however, have sustained steady performance despite the impact of rising interest rates on investment activity and fundraising.
Infrastructure returns have dropped into single digits, according to the CBRE, but have weathered rising interest rates and continued to deliver predictable, low-risk cash flows for investors. Schroders, meanwhile, sees property total returns registering 4% to 5% in 2024, and rising to between 7% and 9% from 2025 to 2029.
Resilient portfolio performance positions real assets managers well to take advantage of opportunities that will arise when M&A markets eventually do reopen.
Even though sticky inflation has meant that interest rates have not come down as quickly, or by as much, as anticipated at the beginning of 2024, there is confidence that rates have now peaked, with rate cuts on the way. The European Central Bank (ECB) has already trimmed rates in 2024, with the Bank of England and US Federal Reserve expected to follow suit in H2 2024.
As rate cuts begin to come through, real estate and infrastructure dealmaking should finally revive, making it easier for managers to sell assets and return proceeds to investors. Increases in distributions will have a positive impact on fundraising, as LPs get back to reinvesting proceeds in the next vintage of funds.
Through this period of low transaction volumes and low fundraising in real assets, managers have also adapted and kept busy by developing real estate and infrastructure debt strategies, forming joint venture partnerships, and executing deals through separate accounts and deal-by-deal arrangements.
Maturity wall looms
Even if real assets M&A markets are set to rally, one looming cloud on the horizon for managers will be refinancing current borrowings as debt maturities come into view.
According to MSCI figures reviewed by asset manager LGIM, around £130 billion of UK commercial mortgages will mature between 2024 and 2026, with the equivalent figure for the US is sitting in the US$1.4 trillion region.
For many issuers, these maturing debt tranches will have been issued at the peak of the credit cycle, when borrowers could take on relatively high levels of leverage at low financing costs. Borrowers that have to refinance will find that borrowing costs are significantly higher, and that the amount of leverage available is down. It will be difficult, then, for investment managers to maintain existing capital structures for their portfolio on the same terms.
This will not necessarily lead to defaults but is likely to see higher financing costs and an uptick in amend-and-extend deals, equity cures, and repricings, which will put strain on cashflows and stretch manager resources.
Going Green
There are certain subsectors within real assets, however, that are expected to ease through near-term refinancing pressures and navigate the transitional period out of the cycle of interest rate hikes.
Infrastructure investments facilitating decarbonization and energy transition have sustained ongoing investor interest through recent periods of market dislocation and are expected to continue enjoying strong investor and lender support through the rest of 2024 and into 2025.
According to LGIM, countries representing 90% of the world’s population have committed to net-zero targets, and in the US and Europe substantial subsidies have been made available by governments to accelerate the shift.
The long-term, strategic priority placed on net zero by policymakers has seen energy transition emerge as one of the most resilient areas for investment during the last two years.
CBRE notes that the five largest project finance deals in 2023 were all linked to energy transition, while an Infrastructure Investor survey found that renewables ranked as the most popular segment for LP infrastructure allocations.
In real estate, meanwhile, ESG is becoming an increasingly important differentiator, with research from JLL indicating that office buildings with sound green and energy efficiency credentials are able secure higher capital values and rents. Similar trends have been observed in logistics assets, where Savills has found that 90 percent of tenants in logistics real estate are prepared to pay a premium for sustainable buildings.
In a real assets market that is still finding its feet after a period of climbing interest rates, ESG and energy transition will remain the core drivers of fundraising and deal activity, even as other parts of the market spring back to life.

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Key contacts

Tim Toska
United States
Global Sector Head, Private Equity

Greg Myers
United States
Global Sector Head, Debt Capital Markets

Anita Lyse
Luxembourg
Global Sector Head, Real Assets