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With increasing capital allocations, the need for portfolio management, operational automation and risk mitigation inevitably follows.
Within private markets, private debt has been one of the sector’s fastest growing strategies.
According to Preqin, private debt has enjoyed an impressive 13.5% annual growth rate over the last decade, with AUM (assets under management) totaling $1.21 trillion at year-end 2021, and it is forecasting this will rise to $2.69 trillion by 2026.1
This momentum is being fueled by the surging investor appetite for direct lending strategies in particular – which together with distressed debt – comprises 60% of private debt’s overall AuM.2
Inflows into direct lending products have been robust owing to the strategy’s compelling performance over the last few years.
However, it is possible institutional investors could start dialing back their exposures to private debt strategies amid concerns that inflation will no longer be a transitory phenomenon – as many experts initially predicted – but more enduring.
Funds require technologies that combine the functionality necessary for private debt investing with the flexibility and ease of use of current spreadsheet solutions. Attempts to force-fit solutions not built for the private debt markets often fail; they create new risks and challenges while continuing to require the use of spreadsheet solutions.
Regulatory agencies and investors continue to press for greater transparency. Data quality and connectivity are paramount. Firms must consider all current regulator and investor reporting requirements and anticipate enhanced disclosure requirements in the near future.
There are three key items to consider in framing your fund’s technology strategies:
Ensure your technology can manage the complexity that private lenders require. Discover the productivity gains available via the award-winning Broadridge private Debt Portfolio Management solution.
• Compliance • Borrower Monitoring
• Collateral Management • Portfolio Management
• Investment Decision Workflow • Investment Accounting
1 Preqin – January 12, 2022 – Private debt AUM set to double to $2.69 trillion by 2026
2 Preqin – January 12, 2022 – Private debt AUM set to double to $2.69 trillion by 2026
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