Tech & Evolving World of Alternative Asset Management!

Valuations - 😟 Had Always Been Worrisome!  O ne of the biggest challenges in Asset Management is to arrive at the fair market price of the portfolio and the assets that are being invested in. This challenge multiplies as the portfolio becomes more illiquid with few reliable sources of valuation data. Some of the biggest fund failures over the last few years like the Third Avenue Asset Management collapse have been attributed to badly mispriced securities.  In the aftermath of 2008 financial crisis Valuations of securities at Funds has been in focus with investors and regulators. Investor due diligence increasingly focuses on valuation policies, processes and models. Regulators across the globe have focussed on Valuation processes and increased their oversight of how assets are being valued. A big learning from the 2008 financial crisis was how lax some of the valuation processes had been with even the larger banks which created knock-on effects up and down...

Deals Getting Complex! The CEO of Blackrock - one of the world’s money manager, Larry Fink had once said  “Using technology is critical, It’s critical for us as investors, as we’re spending more time analyzing new sources of data, spending more time creating algorithms on the new sources of data. And we’re using technology to be more connected with our clients to help with financial literacy, to help all our clients navigate all our clients’ money.” The best Fund Managers including those at Goldman Sachs, JP Morgan or Blackrock are making outsized bets on technology to manage the business of investment. As Fink goes on to say “Technology will change the entire eco-system.” Technology has traditionally been deployed to reduce Operational Costs and get better access to data. But increasingly it is being used to manage the entire process of Investment Management. Fund Managers are increasingly developing sophisticated tools and techniques to manage the front end of th...

Alternative asset manager  be it a Private equity manager or a hedge fund manager or say a Family Office manager ,  has needs which are different from the software solutions currently available on the market. Where alternative asset manager needs a 360 view of his portfolio, his functionaries for example the accountant  has a more pointed problems at hand  he is only interested in tracking  the cash flows,  assigning costs to individual transactions etc which is limited to an area of the business accounts. The software solutions deal with just specific aspect of the business or are "point solutions". This leads to a huge gap between what is needed and what is available for the alternative asset managers today. An asset manager is managing different assets under his fund and has varied needs of data. A complex asset manager like a Blackstone or Carlyle of today would be managing a Private equity fund, a Credit fund, Real Estate Fund, a Distressed ...

Alternative Asset Managers have many challenges today. Alternative Asset Management market is not the same anymore as what it used to be say 2 decades back. Everything around us have changed drastically, but unfortunately and for a strange reason the tools and software are the same which were created then. The reason to this is that the software created then had huge costs and are still in the process of recovering the cost of creation, also these solutions have pretty high cost of installation, management, and maintenance. This makes it almost impossible for the startup and mid-market asset managers to even think of these as they have just started and have only limited funds to manage their show. So technology is the last thing on the minds of these mid-market private equity managers to invest in. Even for the big asset managers the problems with technology are many. The solutions which they are using or are currently available in the market are mostly point solutions and there i...

Alternative Asset Management industry is in for a disruption now, tech adoption has been poor as compared to other industries like Media, Commerce etc where they have seen a major difference in the way the industry used to operate. We are either stuck with those complex ERP solutions designed way back in late 90's and early 2000's or just don't have any solutions other than relying on the spreed sheets. The Tech solutions which were conceptualized 2 decades back are  mostly point solutions and have a huge cost associated with that technology. So where the large Asset Managers despite their investments cannot have the holistic view of their business the startup managers and the mid-market Asset Managers cannot even think of such a technology because of the huge investments required. Watch Founder and CEO of On Pepper, Mr. Pulak Sinha talk about it and the reason to why we exist!