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Private equity tech solutions: Hero of the mid-market fund manager?

Private Equity Mid-Market Baxon Solutions

European  Private Equity mid-market fund managers are ahead of the curve. Returns data spanning more than 20 years shows that mid-market funds across Europe have outperformed all other asset classes, generating annualised returns of 17.2% vs 9.2% for the broader market[1]. Even more interesting is how these returns were produced. Invest Europe research suggests that rather than using leverage and multiple expansion, as is often the case for larger funds, top performance in mid-market funds was largely achieved through organic growth and operational efficiencies. The success of this fund-type means it continues to be favoured by investors this year, with 61% of LPs ranking small to mid-sized buyouts as the best opportunities in the market and 73% are looking to invest in these funds.[2]

Despite the positive outlook and history of out-performance, being a mid-market fund manager is not without its challenges. In a market saturated with high quality firms, standing out from the competition is becoming increasingly difficult, and having a robust track record of strong performance is no longer sufficient unless value creation can be tangibly demonstrated to investors. According to a recent Investor Survey by Preqin, over 90% of LP’s now rank operational excellence as one of the most important factors used to differentiate superior fund managers[3].

Transparency and granularity in reporting have become prerequisites for fund managers seeking to meet strict regulatory guidelines and LP demands – requiring managers to invest more of their limited time and resources into reporting and compliance.

Technology now plays a vital role in helping GP’s overcome these challenges and continue to deliver superior returns. Portfolio management software solutions empower fund managers to make better and more informed decisions on their portfolio investments and become more efficient at communicating with investors. Significant cost and time savings can be made in streamlining the process of collecting, validating and reporting portfolio information, freeing up valuable resources that can be channelled into enhancing portfolio performance.

The Baxon system is a cloud-based portfolio management solution, built specifically to meet the needs of a mid-market GP. The off the shelf reporting catalogue, leveraging over a decade of industry experience and customer feedback, allows for faster implementations at minimal impact to the operations of the GP, whilst maintaining the flexibility to cater for complicated financial models and unique fund or investment structures. Baxon has the fastest implementation times in the industry with clients up and running on the system in just 12 weeks.

A strategic partnership with leading data provider Preqin, who track over 6,000 LPs globally, has enabled Baxon to better understand investor’s needs and develop reports and benchmarks tailored to the desired requirements of LPs around the world. Baxon’s set of “best practice” reports are entirely flexible and can be easily customised to fulfil each individual client’s desired outputs, whilst also satisfying all the necessary industry standards and regulatory guidelines.

To find out how can we help to streamline your portfolio management processes, click here to arrange a demo.

By Lucy Fenwick, EMEA Business Development Associate at Baxon Solutions


[1] Invest Europe: European mid-market Private Equity – Delivering the Goods – March 2013
[2] Preqin Investor Outlook – Alternative Assets – H1 2016
[3] Preqin Investor Survey – Due Diligence and Portfolio Monitoring Processes – April 2016