Strategic Fund Administration – October 2017

Why Having a Sophisticated Private Equity Fund Administration Solution Is More Critical Than Ever

NES Financial Private Equity Advisory Board member Bill Salus discusses how shifting dynamics in the PE market are driving managers to seek a more rigorous, more strategic fund administration model.

Since the Madoff and 2008 financial crises, there’s been a strong push toward transparency across alternative asset classes. This push has come from two directions simultaneously: from limited partners anxious about black-box investment models, and from regulators concerned about the overall security of financial markets.

While the drive toward transparency hasn’t gone away — and alternative funds will likely remain under the microscope for some time — investor priorities have shown signs of rebalancing toward performance. In addition, with the general expectation that the Trump administration will be more averse to financial regulation than its predecessors, many managers feel less impelled to prioritize operational transparency in their spending decisions.

Still, the overall level of industrial-strength fund management infrastructure has definitely risen; it is now expected by investors and drilled into during due diligence exercises. And so, these market-driven shifts do not mean that having an effective, data-driven fund administration solution is now less of a priority for private funds. In fact, the opposite is true — for several reasons:

Competition. With competition for capital stronger than ever, and the scale of operational risks such as cyber or AML/KYI matters larger than ever, funds require more rigorous administration (efficiencies, streamlining, compliance, security, etc.) than before — not less. These are the bedrock services that every manager needs in order to operate today, regardless of their size or aspirations.

Complexity. Competitive differentiation is driving many funds to devise unique, highly complex investment strategies, often involving illiquid assets such as real estate. Management of these strategies requires sophisticated infrastructure — the ability to simultaneously manage multiple databases and feeds, calculate valuations, apply advanced techniques such as data analytics, and employ augmented and artificial intelligence applications. Rather than attempting to build such technical competencies in house (a task that many fund managers see as beyond their core mission and/or capabilities), managers are finding strategic advantage in working with outside providers who have the required scale, technology and expertise.

Structuring. Performance is about more than rates of return. It’s also about tax efficiency, and the ability to handle and offer investors advantageous structures. Complex investment strategies require intricate structuring, and managers are constantly seeking to fashion tax advantages — for example, offshore or onshore fund structures using look-throughs or blocker corporations — that provide optimal tax and investment efficiency to investors. While an investment strategy may be straightforward, the fund structures are not.
Value-added features. Offering limited partners services associated with large-scale institutional investors — such as a sophisticated investor portal with real-time visibility into their funds, or even portfolio analytics — can also create significant competitive advantage, especially for smaller funds competing with larger players.

Holistic approach. Addressing infrastructure in toto — beyond the share of tasks traditionally outsourced to fund administrators — could enable significant efficiencies, higher quality, stronger compliance and better security for private equity funds. By its nature, a holistic, active-data architecture would not only drive down costs and tame the complexity of juggling multiple providers; it could begin to transform the back office into a strategic growth driver — enabling a kind of “operational alpha.”

Regardless of the ebbs and flows of the market, ultimately, what all fund managers need is the confidence and flexibility to run their businesses the way they see fit. The right mix of technology and client service can give them the solid foothold they need to maximize their strategic advantage at an especially complex time.

For more insights on Fund Administration visit NES Financial or the NES Financial blog.

Token Mania – July 2017

Lex Sokolin of Autonomous releases first report on initial coin offerings

Autonomous is pleased to announce the release of “Token Mania,” an in-depth look at Initial Coin Offerings: What they are, how they work, and the ways in which this new funding mechanism based on distributed-ledger technology stands to displace traditional markets for public and private investment.

This 78-page document addresses many of the controversial issues that have surrounded the ICO phenomenon, including similarities to the dotcom bubble, the impact of “Bitcoin whales,” the landscape of regulation, and other topics. The analysis includes key takeaways for startups, financials incumbents and investors, and is available freely from Autonomous.

Access the full report here.

Read more from Lex Sokolin here.

NES Financial – March 2017

NES Financial Appoints Bill Salus to Private Equity Advisory Board

San Jose, CA, March 23, 2017– NES Financial, a Silicon Valley Fintech company providing technology-enabled solutions for efficient back and middle office administration of complex financial transactions, announces the appointment of Bill Salus, Founder and CEO of Paddock Consultancy, to its Private Equity Advisory Board.

Named in Global Custodian magazine’s Securities Services Hall of Fame, Mr. Salus has over 30 years of experience in sales, management, and consulting in the global investment and financial services industry. Most recently he led Apex Fund Services, a leading fund services company, as Global Chief Executive Officer. Mr. Salus has held senior positions at BNY Mellon, PNC Global Investment Servicing, KeyCorp, and Bank of America. He also serves on the Finance Committee for the Ronald McDonald House of Wilmington, DE and is a member of the 2017 Committee of Hearts, Hedge Fund Cares.

“With Bill, the company gains the experience of someone who has been there and done that in our industry, but also someone with an informed perspective on where the industry is going, and the value of the innovative data-driven fund administration we’re bringing to the market,” says Michael Halloran, CEO of NES Financial.

The company is addressing the evolving operational and services needs of the private equity market with an innovative third-party Fund Administration Solution. Aimed at helping private equity firms raise and retain capital more efficiently and effectively, the solution reduces operational risk by improving compliance and data security, creating greater transparency and service to limited partners, and utilizing data analytics to generate valuable business intelligence for general partners and managers.

Mr. Salus points out, “NES Financial has recognized the emerging needs in the Private Equity Fund Administration space and has developed next generation technology that is revolutionizing the industry. They’re focused on leveraging those innovations to deliver operational excellence, reduce administrative costs, while also providing the kind of valuable business intelligence today’s savvy GPs and investors are looking for from fund administration.”

About NES Financial – NES Financial is a Silicon Valley financial technology (Fintech) company providing technology-enabled solutions and services for the efficient back and middle office administration of complex financial transactions. Serving private equity, commercial real estate, and Fortune 1000 clientele, we offer industry-leading fund administration, loan servicing, specialized EB-5 administration, and 1031 tax deferred exchange services. Our unwavering commitment to data security, operational redundancy, and compliance reporting is evidenced by 11 consecutive years of successful independent audits of our technology, processes, and financial controls. Today, NES Financial services over 190 funds, administers over $75B of 1031 transactions annually, and has worked with over 550 EB-5 projects. For more information, visit