Mumbai: As investors in private equity (PE) and venture capital (VC) funds demand more access to information, fund managers are resorting to Web-based financial reporting, fund-raising and capital call or drawdown templates to ensure transparency.
Portals such as IntraLinks Inc. and Investment Cafe that provide these services are seeing an increase in usage from Indian fund managers, or general partners (GPs) as the industry knows them.
Fund managers, especially those raising funds now, are using these portals to provide potential investors, known as limited partners (LPs), information on private placement memorandum, partner biography, past performance, strategies and market plans for their funds. They also use the platforms for information related to investor relations such as monthly, quarterly and annual reports; distribution notices and capital calls.
Once these are stored, LPs can log in and access the information whenever they want.
Ashwin Advani, head of sales (India) for US-based Investment Cafe, said awareness on information security among Indian GPs has increased, especially among those interested in raising money from foreign investors.
At least 117 PE and VC funds are on the road to raise $33.5 billion (Rs1.5 trillion) to invest in India, according to Preqin Ltd, a UK-based research firm that tracks the alternative investment market.
“International GPs realize that disseminating information via email attachments (capital calls, distribution notices, etc.) to LPs is a very unsecure way of transmitting information as it can be hacked and, therefore, the confidentiality agreements can be jeopardized,” said Advani.
Another reason for the increased use of such services is that several new independent PE funds were founded by people who headed global funds in India and who are aware of international standards.
In January, the Institutional Limited Partners Association (ILPA), a not-for-profit organization comprising institutional investors in PE, released the first of its five recommended standardized reporting templates.
As part of its efforts to generate industry efficiency, improve uniformity and transparency, and reduce expenses in administering and monitoring PE investments, ILPA launched capital call and distribution notice templates.
Standardized templates for annual and quarterly reporting as well as portfolio metrics are also in development.
Muneesh Chawla, managing director of Blue River Capital Advisors (India) Pvt. Ltd, a Mumbai-based PE firm, said these portals offer a cheaper and more convenient option.
“Otherwise we have to have it either on our own website and obtain the accounting software and the people to manage it,” said Chawla, who is currently evaluating such Web-based services for subscription.
Such services are especially useful for funds with a large number of LPs, he said.
“Two-three years ago, we did not have Indian GPs using the product and today we have a good number of them doing so. We have seen an uptake of this adoption in the past one year,” said Richard Smolen, managing director (Asia-Pacific) for US-based IntraLinks. He declined to give details on Indian clients using these products.
Among IntraLinks’ global clients are PE funds such as AXA Investment Managers and Apollo Management LP. “Our alternative investments business grew by 30-40% last year,” said Smolen, adding that IntraLinks has some 40,000 LPs logging to its portals.
According to International Data Corp., a market research and analysis company, the market for worldwide collaborative content workspaces is expected to grow from an estimated $9.3 billion in 2010 to $12.7 billion in 2014.