The two main drivers of infrastructure investing are decarbonization and digitization. Inspired by regulators, governments and society at large, these investments align with the larger trend of increased interest in ESG. The increased regulatory requirements guiding these investments in areas like renewable energy and smart technology create some operational challenges for fund managers.
The combination of a large number of infrastructure categories and a growing diversity of fund types and structures have increased the operational complexity of infrastructure investing. Infrastructure, as an asset class, often overlaps both private debt and private equity, and co-investment is gaining favor as a way to take a direct stake in specific projects, rather than passively investing in a portfolio of projects.
The operational challenges that managers are facing as a result of this increasing complexity impact areas like fund accounting, valuations and administration. These challenges are compounded for funds that invest globally and are exposed to currency and interest rate risks. Another layer of complexity comes from different jurisdictions having different tax and reporting requirements, and a lack of standardization for ESG metrics.
To address these challenges, fund managers need consistent and reliable data across the investment lifecycle, as well as the ability to aggregate and integrate huge volumes of data from diverse sources to get a comprehensive view of a fund’s financial health and performance. To achieve the accurate and timely data needed to provide the transparency and clarity investors expect, many fund managers are choosing to outsource their operational activities.
Through outsourcing, fund managers can gain access to advanced technology, automated workflows and sophisticated data management, as well as industry expertise. Managers should choose a qualified service provider with demonstrated regulatory experience and the data management and reporting capability needed to satisfy LP demands.
SS&C provides leading technology-powered solutions and operational services for the global investment management industry, with expertise in the full range of private market investments, including infrastructure, real estate, hedge, private equity and venture funds. To learn more about the operational challenges stemming from the operational complexities of infrastructure investing and how outsourcing can help, download our "Navigating the New Frontier in Infrastructure Investing" whitepaper.
