Market conditions are influencing a trend for private capital fund managers and GPs to perform an operating model review in pursuit of performance. This review considers the service provided by third-party service providers such as your fund administrator.

Following the introduction of this trend in the last article, we now explore the four core value drivers and objectives that underpin such a review to assist the determination of what benefits an operating model change could bring to your business:

  • Cost reduction
  • Operational effectiveness
  • Risk Management
  • Investor experience

Cost reduction

You may be able to achieve cost saving targets without compromising on performance or quality by working differently with your existing and/or transferring to a third-party service provider (such as your fund administrator).

A new provider may be able to offer fee reductions by taking a longer-term view on the relationship or be able to leverage a more efficient operating model themselves.

Operational effectiveness

Identifying the processes and/or deliverables that take up the weight of internal resource and time may help apply focus in the right areas.

A consideration of whether there have been opportunities missed because of sub-optimal reaction times may be relevant.

Risk management

What is keeping you up at night?

Are there historical errors and/or any specific areas of discomfort that your team has over legal, tax and regulatory change which may position an adjustment to a specific part of your operating model.

Identifying areas of risk may yield a different level of interaction with your fund administrator and other third-party service providers to help manage risk better overall.

Investor experience

Fund managers and GPs are generally seeking a route to professionalising[1] their approach to fundraising. This may result in specific objectives around enhancing the investor experience on an ongoing basis or there may be some direct or indirect investor feedback that needs to be addressed.

Adjustments to processes and experience enhancements through the application of technology may be a route to attracting new capital inflows.

At Belasko, we partner with private capital fund managers and GPs to offer a tailored and fully outsourced fund administration solution to support you in achieving your target operating model.

If this would be of interest to discuss further, please do get in touch with Nick McHardy, our Group Head of Funds at [email protected].

In the next article, we explore the different options that fund managers and GPs should consider in achieving the specific objectives of an operating model change.

[1] Bain & Company Global Private Equity Report 2024