Private market strategies, including private equity, private credit, real estate, infrastructure and venture capital, have experienced significant growth as investors diversify their portfolios for better risk-adjusted returns. In Australia, this shift[1] is visible among superannuation funds, which are expected to increase investments in private markets by A$31 billion for private equity, A$41 billion for real estate and A$36 billion for infrastructure over the next decade. However, for investment managers aiming to capture this demand, it鈥檚 crucial to establish robust operational infrastructure to accommodate both the scale and complexity of these investments.
Key challenges emerge as firms evolve and seek to meet changing service requirements or explore different investment structures, such as direct investments, co-investing or future allocations through funds. Additionally, fund managers face a strategic choice between focusing on domestic investments or expanding overseas, with each path presenting unique compliance and resource allocation demands.
As complexity of these investments increases, so do the demands on data and system management. Fund managers need effective data integration, advanced analytics and comprehensive data security measures to handle investor and internal reporting. Transitioning from basic spreadsheets to sophisticated data and platform solutions, whether building internally or working with technology partners, is essential to maintain accuracy and compatibility across systems.
Finally, providing staff with the best systems is crucial for growth. This includes deciding on internal versus outsourced functions and ensuring thorough operational due diligence. Ensuring smooth operations across the value chain, from data handling to service delivery, is the cornerstone of achieving scalable and sustainable success in Australia鈥檚 expanding private markets.
To learn more about adapting to the increasing complexity of private market strategies, download our "Streamlining Your Operations as Investment Complexity Increases" whitepaper.
[1] Industry Super Australia, 鈥淭he Investment Opportunity in Australian Private 91视频鈥� (November 2022)
