From Ocorian

• Almost all private equity, venture capital and real estate fund managers will increase the level of outsourced services they use 
• But one in 10 warn service levels are poor or average and outsourcers are not delivering on problem solving
• Nearly half will look to consolidate services with one partner or cut back on number of outsourcing partners

Alternative fund managers are increasingly reliant on outsourcing key services and the trend is set to accelerate over the next three years, new research* from Ocorian, a market leader in regulation and compliance services for funds, corporates, capital markets and private clients.

Almost all (99%) private equity, venture capital and real estate fund managers questioned in Ocorian’s   study, regardless of location, plan to increase the level of outsourcing at their organisation over the next three years with nearly half (46%) planning to increase the level of outsourcing by between 25% and 50%.

That builds on strong expansion in the past two years with 98% of fund managers reporting a rise in the level of outsourcing. One key area for investment was regulation and compliance with 91% of fund managers saying budgets for those outsourced services had increased in the past two years.

However the study found some dissatisfaction with the services provided by outsourcers with 10% saying the level of service is average or poor and the same number saying outsourcers are average or poor at solving complex business problems for them.

Key criticisms include poor responsiveness, a limited scope of service, technology issues and poor onboarding. Some fund managers complained about the level of expertise of outsourcers.

Criticisms of the services provided help explain a shift away from relying on a range of providers; nearly half (49%) questioned say they expect their organisation to consolidate to one partner or a smaller number of partners. By contrast 39% plan to use a wider range of partners and around 11% plan to switch from their current provider.

Nearly half (45%) questioned say it is very important their provider offers a wide range of services while 50% say it is quite important.

Paul Spendiff, Head of Business Development – Fund Services, at Ocorian said: “Outsourcing of services is clearly already very important to alternative fund managers and set to grow in importance over the next three years with almost all firms plan to increase their level of outsourcing.

“Increasing confidence about fund launches and capital raising is very much reliant on the expert support of outsourcing partners but there are issues companies need to address if they are to become successful partners for fund managers.

“There are significant numbers of fund managers who are unimpressed with the service they receive and quite often on basic issues such as expertise. Where outsourcers fail to improve and expand their product offering managers are increasingly switching to firms offering high touch service and a single source consolidated solution.”

The table below shows the predicted increase in the level of outsourcing over the next three years among alternative fund managers.

WHAT WILL HAPPEN TO THE OVERALL LEVEL OF OUTSOURCING OF KEY FUNCTIONS IN THE NEXT THREE YEARS?	PERCENTAGE OF ALTERNATIVE FUND MANAGERS PREDICTING THIS LEVEL OF INCREASE
Increase by up to 25%	21%
Increase by between 25% and 50%	46%
Increase by more than 50%	31%
Stay the same	1%
Decrease	–

About Ocorian Fund Services

Ocorian’s fund services team delivers operational excellence across fund administration, AIFM, depositary and accounting services to the world’s largest financial institutions along with dynamic start-up fund managers and boutique houses. It’s team of over 300 funds specialists work across all major asset classes of alternative investment funds such as private equity, real estate, infrastructure, debt and venture capital, whilst its specialist Islamic Finance team is a leading provider of Sharia-compliant investment structures.

ENDS

Note:

The above release is intended to provide a very general overview of the matters to which it relates and is provided for your convenience. It is not intended as legal or investment advice and should not be relied on as such.

*Ocorian commissioned independent research company PureProfile to conduct a global study of 301 senior executives. The survey was carried out among board directors at companies with annual turnover of more than $250 million, fund managers working in family offices, private equity, venture capital and real estate; and senior executives working in capital markets focused on structured credit, CLOs, securitisation, mortgage-backed securities and asset- backed securities. Respondents to the survey, which was conducted in November 2023, were based in the UK, continental Europe, Asia, the Middle East and North America and included 150 alternative fund managers including 150 alternative fund managers

About Ocorian

 Ocorian is a global leader in corporate and fiduciary services, fund administration and capital markets.

Supporting and protecting global investment is Ocorian’s priority; it manages over 17,000 structures on behalf of 8,000+ clients including financial institutions, large-scale international organisations, and high-net-worth individuals.

Ocorian provides fully compliant, tailored solutions that are individual to clients’ needs, no matter where in the world they hold financial interests, or however they are structured. 

The group offers a full suite of corporate, fund and private client services across a network of offices spanning all the world’s financial hubs. Locations include Bermuda, BVI, Cayman, Denmark, Guernsey, Finland, Hong Kong, Ireland, Isle of Man, Jersey, Luxembourg, Mauritius, Netherlands, Norway, Singapore, Sweden, UAE, the UK, and the US, and employs over 1,500 professionals.

To find out more about Ocorian and its services, including regulatory information, visit www.ocorian.com