The Importance of High-Touch Investor Services, Private Equity

Nov 10, 2022

| Back-Office Services | Client-Centric | Private Funds

Investor Services is a specialized functional area which integrates the field of accounting, communication, and administration to successfully manage the flow of information between a private equity firm, its investors, and other stakeholders such as the general partners. This function is handled by either an in-house team at the investment management firm or a third-party service provider. In either case the goal is to offer the firm’s investors accurate information about the company’s operations, and make it easier for private and institutional investors to receive investor-specific information regarding investments and the funds’ performance.

Investors play a significant and critical part in a firm’s success and growth. Due to the rising complexity of private equity financing transactions, the growing desire for transparency among new and current investors, and increased competition among private equity firms for funding, firms need to establish strong, transparent relationships with current investors and foster and grow relationships with potential investors to create a competitive advantage in the private equity industry.

What Is Private Equity Investor Relations?

When it comes to investor relations in the private equity industry, there is typically a constant flow of communications from private equity firms to their investors and vice versa. An efficient investor relations department allows for a better understanding of the firm, robust corporate governance, financial reporting and impact performance, and other non-financial performance indicators like brand recognition and goodwill.

The primary goal of either an internal or third-party investor relations team is to keep investors informed in a transparent, accurate, and consistent manner about market trends and major events that may impact deal flow, fund performance, or the private equity fund structure.

The role of the Investor Relations team is to represent the firm to the investors in order to create awareness and understanding of its investments among the investor community, essentially they are the ambassadors of the firm working to deliver a consistent message to the investment community, in order to maintain that operational success.

By creatively combining accounting/finance, communication, and marketing into one solidified message, the firm is able to attract and retain high-quality investors across multiple funds.

The following are some of the benefits of an effective investor relations team:

  • Maintain shareholder loyalty
  • Increase in long-term shareholder value
  • Ensure responsive capital markets for future financing at favorable conditions
  • Reduced capital cost
  • Establishing long-term credibility with the financial community
  • Reputation management/brand building
  • Improved corporate governance
  • Qualitative reporting
  • Media relations
  • Investor commitment and responsiveness
  • Functional team dynamics
  • Risk mitigation
  • Ability to address weaknesses and issues
  • Regulatory compliance
  • Ongoing training and support

Investors are the backbone of the firm – without investors, the firm would not have the continuation of its operational success. Because of the importance of the relationship formed between fund managers and their investors, investing in a robust internal IR plan (and/or identifying a third party service provider who understands and values the importance of the manager-investor relationship) is a critical component to the firm’s success in the long term.

Benefits of Outsourcing Investor Relations

Investor servicing is a mission-critical aspect of fund administration. By outsourcing the investor relations functions to a third-party provider like Ultimus LeverPoint who provides tailored services to support the unique needs of various investor types, fund managers are able to more effectively run their investment operations while entrusting their investor base and related communications to a recognized, well-respected name in the fund administration world.

A third-party Investor Services team plays a pivotal role in the administration process, serving as an extension of clients’ operations, supporting specific needs and ad-hoc requests. Investor Services include:

  • Distribution of investor correspondence
  • Handle ad hoc reporting requests
  • Manage investor communications, responding directly to investors
  • Oversee all the investor contact data & partner demographic information
  • Prepare the capital call and distribution statements
  • Set-up and maintain communications portal
  • Side letter requirements and independent audit confirmations
  • Review of subscription documents for accuracy and completeness
  • Anti-Money Laundering/Know Your Customer identity verification procedures
  • Investor transaction coordination and processing
  • Distribution of investor statements and other correspondence via online portals or secure emails
  • Maintenance of investor demographic, qualification, and contact information
  • Fund of fund investment document completion
  • Investor Due Diligence

Additionally, an outsourced investor services team can manage the fund manager due diligence processes for funds throughout the fund lifecycle, including secondary transaction due diligence support. The team can provide clients with Anti-Money Laundering and Investor Verification services, reviewing all investors against the Global Sanction List (OFAC), Foreign Official/Publicly Exposed Person and List, Global Enforcement List.

Investor Communications

The Investor Communications technology platform can employ a preeminent investor portal solution for interactive investor communications. In a secure environment, fund investors are able to access every type of communication, including Annual and Quarterly Financial Statements, K-1s, Capital Account Statements, Capital Calls, Distributions, General Communications, Legal/Compliance Notices, ad-hoc reports/requests, etc.

Administrative Support for Funds in Market

An outsourced Investor Relations team may utilize a consistently applied process for administrative support during the fundraising process. While supporting numerous fund launches, from easy to complex , the team is adept at investor onboarding and can easily maintain your ongoing investor communication. The team would also capture partner demographics and support firms through each fund closing, reviewing side letters, and completing requests for information, and tracking disseminated information.

Who Is a Private Equity Investor Relations Specialist? (Leveraging the Investor Relations team)

Investor relations experts in the private equity industry manage relationships with current investors and promote funds to potential investors. Investor relations professionals serve as the primary point of contact between investors and the private equity firm, keeping them informed about the fund. Ultimus LeverPoint’s experienced investor services team specializes in the nuances of subscription documents and Anti-Money Laundering and possesses extensive experience in communicating directly with private fund investors. Our services provide customizable, adaptable and flexible Investor Relations solutions required to support a complete turnkey solution or to support an internal team, providing firms of all sizes the resources needed to support their reporting requirements mandated by their limited partnership agreement.

What to look for in a third-party investor relations team

Any private equity firm that wants to grow and succeed should have a well-thought-out investor relations strategy. The appropriate strategy can assist the firm’s reputation, tell its story, articulate investment strategies, and gain industry credibility.

Achieving these goals may be a combination of many distinct aspects, ranging from a well-established corporate story, an effective investor relations website, to leveraging a third-party provider, but by outsourcing Investor Services solutions to Ultimus LeverPoint, it can reduce the resources needed to support an in-house Investor Relations team. When you outsource to our team of experienced professionals, we function as your Investor Services staff, effectively handling the day-to-day operations of your Investor Relations team. Ultimus LeverPoint can handle much of the third-party communications that typically would go to in-house team members, removing the administrative burden, leaving the in-house investor relations team to do what they do best – foster strong relationships with your investors.

The Investor Services solutions are performed by a team of highly qualified professionals, separate from the Fund accounting team. The team of associates work seamlessly with your in-house team, to set up the best operating model and schedule of deliverables for the firm. In addition, the team will maintain a high level of communication throughout the engagement, including weekly team status calls, and reviews of deadlines and objectives.

The Future Technology of Investor Relations

Technology continues to drive the future of how Investor Relations is handled and how it influences investment decisions.

Ultimus LeverPoint’s ongoing investment in cutting-edge technology seamlessly combines compatibility with leading industry platforms with our proprietary uSUITE®  that includes innovative applications for private funds such as uINVESTOR™ uACCESS™.

Harnessing the power of automation and digitization not only enhances our clients’ digital capabilities, including real-time access to critical data and expanded access points, but also drives innovation at the investor level and enables us to scale our services effortlessly as our clients’ needs evolve.

With much of our back-end processes becoming more and more automated, our team can focus their attention and efforts squarely on your business strategies and success.

ULP 15950704 11/10/2022

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