Crédit Agricole, through its private equity funds group, is one of the leaders in financing, depositary and fund administration services in Europe for PERE and Infra funds. Its various entities are involved in all stages of the lifecycle of the funds.
CACEIS, a wholly-owned subsidiary of the CA Group, is the European leader in depositary banking and fund administration. For several years it has been operating a dedicated “PERES” (Private Equity, Real Estate and Securitisation) business line, employing more than 250 people across Europe.
Today, CACEIS acts as depositary or fund administrator for more than 2,000 Private Equity, Infrastructure, Real Estate and Private Debt funds in Europe, helping clients to meet their regulatory obligations and provide end-investors with high quality reporting.
“CACEIS works in conjunction with Crédit Agricole’s corporate and investment bank in the provision of subscription lines, allowing fund managers to optimise the cash flow management of their funds for their investors,” explains Arnaud Garel-Galais, Business Development Director at CACEIS in London. “The growth of our assets under administration is also due to CACEIS making available a proprietary online digital platform called OLIS, which gives clients a real time view on all the data. Clients can access information about their investors, their funds and underlying companies, generate dynamic reports and charts, and export the data to spreadsheets to enable further analysis.”
Garel-Galais notes increased interest from UK-based fund managers for Luxembourg fund domiciliation. This has led CACEIS to support clients in building their operating model in Luxembourg where it can also offer fully outsourced fund administration as well as depositary and other services. It has, in that sense, helped propagate the concept of outsourcing in a wider context, as managers look to streamline their businesses and achieve greater operational efficiency.
“Several years ago in France, we undertook our first full outsourcing project for middle- and back- office activities of a leading management company,” confirms Brigitte Chalaud, Business Engineer in the PERES Business Line. “This transformational deal took place with the transfer of part of the manager’s middle-office team to CACEIS, which made it possible to avoid the risk of business interruption on a portfolio of more than forty funds.” It was, she says, “one of the keys to the success of the project”.
A second success factor was upstream preparation. This was led by one of the project managers at CACEIS, who continued to provide support to the middle-office team after it had been onboarded.
“We used this in-depth onboarding experience to offer these services to a large number of management companies in continental Europe. For our cross-border clients, the Onboarding Project Manager looks after the project in its entirety, liaising with the various local teams and factoring in the local nuances of each country while harmonising the processes.”
“CACEIS has developed extensive experience in leading such outsourcing projects including the successful integration of teams from the manager into CACEIS, and is actively seeking further transformational deals with its key partners and prospects in the UK and continental Europe”, confirms Garel-Galais.
In order for outsourced fund administration to work with PERE funds, a ‘Savile Row’ approach is required. Customisation is important and necessitates a sophisticated operating model that can handle the many different PERE fund strategies that exist today. Consequently, CACEIS invests continuously to improve its operating model.
“Our size and reach allow us to provide support for clients with a number of parallel vehicles in several European jurisdictions, offering a harmonised service,” says Garel-Galais. “Our teams work hard to ensure our processes are the same in each jurisdiction, making the process seamless for the client. Our PERES Business Line has its own IT budget and team, and is working on new projects, such as highly granular investment performance reports as well as fee and waterfall breakdown analysis for funds.”
Due to these developments, CACEIS is able to fully understand the needs of GPs and LPs, address their concerns, and ensure a relationship built on trust. By hiring former employees of PERE groups, as well as the “Big Four” accounting firms over the years, it has helped CACEIS build a deep pool of talent to draw upon.
Chalaud explains that in order to mimic the way its clients are organised, the PERES business line itself is organised according to a management company model by integrating all the components of the chain: Back-office, Middle-office, NAV/valuation, sales, Projects / IT.
“The business line is global and organised around a common model, allowing the team to respond comprehensively to its cross-border clients.
“For us, it was key to provide each contact on our client’s side with a corresponding contact within CACEIS from same background and environment, in order to establish a clear line of communication.
“One of the lessons we’ve learnt from our depositary background, but which also applies to fund administration, is that it is key to perform thorough controls and checks without being invasive, or disrupting our clients’ business activities,” says Garel-Galais.
There are many challenges facing GPs such as regulation, continued LP transparency, reporting demands, and the growing threat of cyber-attacks.
Regulatory reporting is increasing in volume and complexity. As a result, a service partner must be able to continuously adapt its templates. For this purpose, the PERES Business Line relies on the broad capabilities of the CACEIS group, which has a footprint in 11 countries globally, to meet these regulatory requirements, which are often similar to those of other asset classes.
“In addition, there are specific reports required by certain categories of foreign investors used to receiving detailed and fairly standardised information. Our PERES Business Line now offers reports in line with Invest Europe (formerly EVCA) recommendations,” adds Garel-Galais.
As mentioned above, the Savile Row mindset to offering customised support to PERE managers is fundamental. Such support cannot be achieved if fund administrators lack sophisticated technology and IT systems. Still, whilst PERE fund administration remains a complex environment, requiring a lot of analysis to understand clients’ investments and holding structures, it is possible to introduce some level of automation into the process.
Chalaud confirms as much, noting that CACEIS increasingly uses algorithms “to relieve our teams from more repetitive tasks” in order for them to be able to focus their time and skill on more value-added tasks.
“As soon as we have identified that certain tasks can be automated, solutions are sought and put in place in coordination with the teams concerned to facilitate the transition.
“As an example, the PERES accounting team is currently running the “Faraway” project which aims to model and set parameters within our accounting tools for the various stages of a standard private equity waterfall calculation. The time savings will enable our accounting teams to focus only on more complex, non-standard waterfall calculations. In parallel, accounting fields have been added to increase the granularity of fees and commissions information in line with ILPA standards.”
“We have also brought automation to capital call notices and distribution instructions. All of this helps to reduce processing times and creates information of a higher, more reliable quality,” concludes Chalaud. ...