From the integration of AI in private equity to the SEC’s Private Funds Advisor Rules, one thing is for certain: change is in the air. Join our very own Dave Traverso, Ned Siegel and Rachel Roth at SuperReturn CFO/COO North America to dive into these topics and more. From May 6^th-7^th, they’ll be on the ground in Chicago to meet with other delegates and discuss the state of the market, ongoing challenges and emerging opportunities. Get in touch with our team today to arrange some time to meet. They look forward to seeing you there!

Join Alter Domus’ very own Mark Gebauer and Dirk Sanden as they attend this year’s BAI Alternative Investor Conference from 22-24 April in Frankfurt. The annual event is focused on alternative investments in Germany, Europe and around the world, and provides the opportunity for attendees to discuss the latest market trends: from the evolving landscape of private credit to private equity co-investments and the impact of artificial intelligence on all markets. Also attending? Set up some time to speak with Mark and Dirk in advance of the conference to discuss these topics and more!

Given ongoing fundraising challenges in private markets, how do you see funds addressing liquidity issues?

Managers are getting creative; continuation funds are on the rise and secondaries activity has stepped up significantly in the last 18 months as GPs have sought to provide liquidity to LPs to allow them to re-up into their next funds. Those solutions all work, but we will potentially see private equity hold periods getting longer than the three to four-year turnarounds that have been typical. Extended periods of high interest rates will lead to returns coming not from leverage, but from longer hold periods, creating efficiencies and driving value creation.

Meanwhile, we feel the markets are starting to rebound, and macro trends in the US are now going in the right direction. The IPO markets should follow, and we would expect Europe to follow and liquidity to gradually return.

There are also opportunities for managers to raise open-end funds from retail-type investors. Those managers with larger platforms have big ambitions to expand and diversify their LP bases and there is a significant amount of capital there to be raised. Broadly, the opportunity for fundraising starts to look better going forward, whether tapping existing LPs or a new LP base.

What has been the impact of recent regulatory developments for managers?

Most of the regulatory developments related to the US Securities and Exchange Commission’s Private Funds Rule are a 2025 problem, with nothing new required until then. Right now, managers are trying to understand what they need to do, and we are looking at how we can be part of the solution.

A lot of the data that will be required by regulators is already there, so this is about being able to pull that out and put it into a digestible format. This regulation is a significant shift for the market that justifies us putting the resources into creating a new service to assist clients on the reporting demands these regulations have created, and we have a product almost ready to go before next year’s compliance deadline.

Bar any significant political change, we see the SEC becoming more involved in oversight, which creates a further opportunity for administrators that have data and regulatory reporting capabilities. In the US, managers have not been subject to the same level of disclosures and regulatory reporting, but in Europe this is very much part of our product offering.

What themes are you seeing in the evolution of operating models for private funds?

One of the big themes we are looking at is the opening up of the private funds market and the way that is driving how the back office is run. We have seen the market move from a partnership approach with minimal reporting to managers now having to comply with Institutional Limited Partners Association standards and regulatory requirements around reporting to LPs, and those requirements continue to increase.

Even if the US decides against further rulemaking, Europe is a regulatory hotbed, and it is not going to get any easier for managers to navigate that. That is driving more outsourcing around core functions, as well as funds looking to outsource more ancillary functions. The outsourcing pie continues to grow because there is much more that managers need to report on. We are also seeing more co-sourcing as a middle ground, where we provide the expertise and the people, but the data and systems remain with the client.

Meanwhile, since the pandemic, hiring challenges and increasing costs have given managers cause to reflect on their operating models and cost bases. With quieter dealflow, CFOs and COOs have been able to step back and review approaches, so we see a lot of larger managers engaging with us as a result.

Finally, consolidation in the industry and the M&A going both ways as alternatives seek to acquire traditional asset managers and vice versa is shifting the approach to the back office. Traditional asset managers come to alternatives from a very different margin environment, which drives more focus on the right cost models and making use of technology and workflow tools to gain efficiencies. Likewise, as alternatives platforms diversify into new sectors and strategies and become larger and more complex, more firms are investigating outsourcing options.

How is consolidation impacting the service models of fund administrators?

For fund administrators, we need to take on the challenge of building up the people, processes, sector expertise and geographical reach that our clients need access to. That is core business for us and inevitably if we are scaling up for one client, we are doing it for 10 or 20 others. That is a challenge we need to keep ahead of.

The arrival of open-end funds in alternatives was a big evolution that we had to create solutions for and address, which we were able to do. Now, as managers get bigger and more institutionalized, and as private markets merge with traditional asset management and the investor base includes more private wealth, the reporting requirements are elevated, and operating models need to reflect that. There will be a point where the line between traditional and private fund administration services becomes blurred, so we need to continue to look carefully at what is coming and what we need to solve for.

How is the industry embracing artificial intelligence and automation?

Internally, we are now using AI in various parts of the business. For clients, automating the subscription process is now relatively well advanced, but there is still a lot of manual process. That is definitely a focus for managers and something they are expecting administrators to be able to solve. We have taken steps to build on the existing digital subscription process we have, in direct response to manager demands.

From an analytics perspective, for managers that are maybe partially outsourced or those with multiple administrators using multiple systems alongside inhouse systems, there is a need to consolidate data in one place. Having a single data lake that you can manage, secure and be able to use efficiently for maximum impact is critical, whether in relation to deal sourcing, transaction management or valuations. That is something managers are looking to administrators to help with, so funds don’t need to build that infrastructure in-house.

Clearly in private markets there is more and more data, firms are getting bigger and deploying more strategies, so pulling all the data together in one place is becoming more important. AI and automation are still relatively new, and firms are at different stages of the journey with different priorities. Those with leaner middle- and back-office teams can see the benefits and are now looking to embrace AI and automation to a greater degree.

This article was originally published in Private Funds CFO’s Future of Fund Services Report.

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Luxembourg, London and Chicago, March 4^th, 2024 – Alter Domus, a leading global provider of end-to-end tech-enabled fund administration, private debt, and corporate services for the alternative investment industry, today announced that it has secured a new strategic investment from Cinven. Cinven is a leading international private equity firm focused on building world-class global and European companies. The transaction gives Alter Domus an Enterprise Value of €4.9 billion ($5.3 bn).

Through the transaction, Cinven will support the long-term strategic growth of Alter Domus, working in close partnership with the founders of Alter Domus and Permira, who will continue to be significant shareholders. Their continued involvement and investment in the firm is a huge endorsement for Alter Domus as a business, its global growth strategy to date and its future potential. The new structure means Alter Domus will now benefit from the support of three fantastic partners in Cinven, Permira and the founders, and this transaction strengthens the capital base of the company enabling it to focus on the next stage of its growth.

Established in 2003, Alter Domus is one of the largest fund administrators globally, with over $2.5tn assets under administration (AUA). Solely dedicated to alternative assets, Alter Domus offers end-to-end tech-enabled fund administration and corporate services across three sectors: private equity, real assets and private debt. With the support of Permira since 2017, the firm has grown rapidly to meet the evolving needs of its client base, building a global network that now spans 23 jurisdictions, servicing 90% of the top 30 asset managers globally. Since Permira’s investment, Alter Domus has increased revenue, EBITDA and employee numbers by 5x.

Additional investment characteristics of Alter Domus that were attractive to Cinven include:

• Its impressive financial track record, with Alter Domus having consistently outperformed the market, delivering double-digit organic growth and attractive margin performance;
• Alter Domus represents a scarce, market-leading global fund services platform that delivers market-leading service levels to a blue-chip customer base including 90% of top-30 asset managers served;
• It is a proven M&A platform in the fragmented fund services market that has a successful track record of acquisitions, and a strong further pipeline of potential buy and build opportunities across a range of markets and geographies;
• The company operates in attractive markets, with the fund services subsector benefitting from the structural growth of private capital markets, increasing regulation and a continued trend towards outsourcing of fund services, together with downside-protection through strong revenue visibility and cashflow generation;
• Alter Domus has received significant investment in the tech-enablement of the company – resulting in best-of-breed third-party platforms, workflow automation and a leading data and analytics product capability to better serve the increasingly complex needs of its global client base; and
• It has an experienced and highly respected management team that has led the strong performance to date.

In little more than two decades, Alter Domus has grown from being a small Luxembourg-based spin-off from PwC to become a world-leading fund administrator. The investment from Cinven is a significant milestone in the development of Alter Domus as it continues along this trajectory. Together with Permira, we are confident that Cinven is the perfect partner as it continues to grow and scale internationally, and I am excited to continue to be a part of the Alter Domus journey.

Alter Domus Founder and Chairman of the Supervisory Board, Rene Beltjens

With an enviable track record of investing in fast-growing, world-class businesses, we are thrilled to welcome Cinven as an investor in Alter Domus. Cinven shares our strategic vision and commitment to developing long-term technology-enabled partnerships with the leading alternatives firms globally through the delivery of operational and client service excellence. Together we look forward to further accelerating our international growth and delivering innovative new services to our clients.

Alter Domus Chief Executive Officer, Doug Hart

Cinven is delighted to make this investment in Alter Domus. Fund services has been a priority subsector for Cinven’s Business Services team due to the attractive business model characteristics and strong growth drivers. Cinven’s Business Services and Financial Services sector teams have worked together in close partnership and have followed Alter Domus closely over many years and admired it as a global leader, with blue-chip clients and leading service levels. Looking forward, we see significant potential for further growth and we look forward to working with the management team and shareholders in the next phase of its journey.

Cinven Partner and Head of the Business Services sector team, Rory Neeson

We would like to thank René Beltjens, Doug Hart and the entire Alter Domus team for their hard work and passion that has allowed our partnership so far to be so successful. The company is now well positioned as a global leader to enter its next phase of growth with the support of an aligned set of shareholders, and we’re looking forward to working closely with Cinven, the founders and management to continue capitalising on the growth opportunity ahead.

Global Head of Services at Permira, Philip Muelder, and Chris Pell, Principal at Permira

The transaction is subject to regulatory approvals and other customary closing conditions.

Alter Domus was advised by Goldman Sachs International and Raymond James (M&A), DLA Piper, Jamieson Group (Dedicated advisors to management), Oliver Wyman (Commercial), EY (Financial & Tax) and Clifford Chance (Legal), Kroll (Compliance), Crosslake (Technology).

About Alter Domus

Alter Domus is a leading provider of tech-enabled fund administration, private debt, and corporate services for the alternative investment industry with more than 5,100 employees across 39 offices globally. Solely dedicated to alternatives, Alter Domus offers fund administration, corporate services, depositary services, capital administration, transfer pricing, domiciliation, management company services, loan administration, agency services, trade settlement and CLO manager services.

Find out more at www.alterDomus.com.

About Cinven

Cinven is a leading international private equity firm focused on building world-class global and European companies. Its funds invest in six key sectors: Business Services, Consumer, Financial Services, Healthcare, Industrials and Technology, Media and Telecommunications (TMT). Cinven has offices in London, New York, Frankfurt, Paris, Milan, Madrid, Guernsey and Luxembourg.

Cinven takes a responsible approach towards its portfolio companies, their employees, suppliers, local communities, the environment and society.

Cinven Limited is authorised and regulated by the Financial Conduct Authority.

In this press release ‘Cinven’ means, depending on the context, any of or collectively, Cinven Holdings Guernsey Limited, Cinven Partnership LLP, and their respective Associates (as defined in the Companies Act 2006) and/or funds managed or advised by any of the foregoing.

For additional information on Cinven please visit www.cinven.com and www.linkedin.com/company/cinven/.

About Permira

Permira is a global investment firm that backs successful businesses with growth ambitions. Founded in 1985, the firm advises funds with total committed capital of approximately €80bn and makes long-term majority and minority investments across two core asset classes, private equity and credit.

Permira is one of the world’s most active investors in the Services sector, having deployed over $11.5 billion to partner with more than 40 companies globally. Current and previous investments from the Permira funds in the sector include: Acuity Knowledge Partners, Axiom, Cielo, Clearwater Analytics, DiversiTech, Engel & Völkers, Evelyn Partners, Kroll, Motus, Relativity, Reorg and Tricor.

The Permira private equity funds have made approximately 300 private equity investments in four key sectors: Technology, Consumer, Healthcare and Services. Permira employs over 500 people in 15 offices across Europe, the United States and Asia. For more information, visit www.permira.com or follow us on LinkedIn.

Media Contact: [email protected]

Katherine-Hope Keown: +44(0)7512 309360

Read Cinven‘s press release here.

Read Permira‘s press release here.

From digital transformation to sustainable finance, which factors have the most impact on shaping the future of both global distribution and asset management? Join Angela Summonte at ALFI’s Global Asset Management Conference in Luxembourg to find out. Gathering fund professionals from across the industry, the two-day event will dive into the latest technological advancements, regulatory changes, and market trends.

Get in touch with Angela ahead of the conference to set up a meeting.

Lizzie Heil and John Budyak will be in Coral Gables, Florida from March 11-12 to attend IMN’s Distressed Forum for Bank Special Assets (East). Meet them there during the two-day event to discuss the outlook for special assets and distressed CRE. From loan defaults and workouts to forbearance and turnarounds, the conference is set to cover the latest credit and workout issues.

Set up a meeting with Lizzie and John ahead of the conference using the contact details below.

How are macroeconomic headwinds impacting the opportunity set across the GP-led secondaries space? How are buyers and sellers remaining flexible and continuing to close deals in a volatile market? What’s in store for the future of the GP-led market? Join Patrick McCullagh for answers to these questions, and more, at SuperReturn Secondaries Europe in London from 11-12 March. He looks forward to meeting with other attendees to discuss the latest trends in European secondaries and how a partner like Alter Domus can help set you up for success.

Get in touch with Patrick ahead of the conference to set up a meeting.

What does the future hold for loan markets? Join Juliana Ritchie as she attends the LMA & LSTA Conference in London on 6 March. From leveraged loan market trends to the investability of ESG, the conference is set to cover the hottest topics in both UK and US loan markets. Juliana looks forward to meeting with other attendees to discuss these topics and more.

Join our very own Sam Wade and Andy Clark as they head to Cannes from 12-15 March to attend Europe’s premier real estate event, gathering the most influential players from all sectors of the international property industry. Sam and Andy will be there to connect with other attendees on the current challenges and opportunities in the real estate market, and how working with a partner like Alter Domus can help set you up for success.

What are the latest and greatest payment trends, products and technology solutions available in today’s market? Join Alter Domus’ Jeff Sykes as he attends the three-day ePayConnect conference from March 11-13 in Orlando. Connect with leaders like Jeff to dive deep into payment channels, including legacy systems and faster payments innovations.

If you’re also attending, be sure to reach out to Jeff ahead of the conference to set up a meeting.