The demand for greater information flows is the most significant factor influencing investor behaviour, according to 71% of private equity professionals.
The global research study was conducted by Vistra, a fund administration, trust and corporate service provider. It surveyed 150 senior executives in Asia, Europe and the Americas and the respondents included general partners (GPs), Limited Partners (LPs) and legal intermediaries.
The rise of environmental, social and governance (ESG) investing has led to demand for better-quality information. The report shows that both the volume and diversity of required information are growing.
“Almost half (46%) of the interviewees are seeing actual data downloads used to create their own reports and analysis from raw data, while 51% said that issues around transparency, e.g. the push to ESG, is creating demands for better-quality information,” Vistra said in a statement on January 13, 2020.
“These demands for access to data for reporting are having an impact on the technological requirements within the business – recognised by 82% of respondents,” added Vistra.
According to the study, 65% of those surveyed said the biggest impact of the shift towards ESG is the additional need for compliance – and that will continue to grow with younger and socially-engaged investors.
The private equity industry appears to be embracing technology, with 85% saying that it could be a major enabler of change.
“In light of the increased demands for data, utilising technology would be a natural step,” said Vistra. “The challenge arises, however, when it comes to data management and integration across outdated legacy systems, and the lack of standardised, industry-wide software.
“The cost of in-house investment (67%) versus outsourcing technology services (55%) seems to be a key decision facing the PE sector. And all of this sits under the cloud of cybersecurity, which was identified as the biggest threat facing the industry for at least the next five years.”
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