Reporting of private placements: a challenge for institutional investors

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Reporting of private placements: a challenge for institutional investors

Fabrice Leone - Global Assets+ Sales and Relationship Manager

Fabrice Leone

Global Assets+ Sales and Relationship Manager
Donatien di Marco - Global Assets+ Senior Business Analyst

Donatien di Marco

Global Assets+ Senior Business Analyst

Private placements offer opportunities in terms of return and risk diversification, which makes them increasingly attractive to private and institutional investors. To implement and monitor these investments, however, it is essential to have the right monitoring and tools.

 

Booming investments

Given the low level of interest rates, institutional investors are looking for returns. In this context, the weight of alternative investments in their asset allocation has increased by around 20% over the last ten years, reaching 6%1 at the end of 2020. One category is emerging in their portfolios and that is private investments, including private equity (PE).

Our clients benefit from reports that comprehensively include both traditional investments and "non-deposited" assets such as direct real estate or private equity

Trends and challenges

Implementing a PE programme presents several challenges: fund-raising and distributions during the investment period, a methodology that is rarely straightforward, sometimes with incomplete data and a lack of consolidation. It also requires careful and regular monitoring. At Lombard Odier, Global Assets+ (GA+) has developed tools to address these challenges. Our clients benefit from reports that comprehensively include both traditional investments and "non-deposited" assets such as direct real estate or private equity. For the latter, we are able to calculate specific ratios and produce detailed information on all financial flows. These analyses are available on a consolidated basis and per individual investment, regardless of the custodian bank.

 

Our clients' projects and concerns

Our clients are becoming increasingly sophisticated and knowledgeable in private equity. They are able to make informed decisions and challenge their fund managers. In this context, GA+ takes the role of a sparring partner. With our analyses that allow us to "make the numbers talk", identify trends or manage cash flows, we are also able to provide them with food for thought. In addition, our direct interaction with PE managers and supervisory boards allows our clients to reduce their risk and focus on their investment strategy and related management.

…our direct interaction with PE managers and supervisory boards allows our clients to reduce their risk and focus on their investment strategy and related management

As a result, GA+ has established a transparent methodology for analysing PE projects by strategy, region or vintage. We are also developing benchmarking solutions and forecasting models to understand cash flow (cash flow forecasting).

In parallel, we continue to work on integrating these analyses into the traditional reporting that we offer via our LO SMART platform.

 

Study on pension funds in Switzerland in 2021 (swisscanto.com)

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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