GP tech adoption looms large on LP investment decisions

The majority of LPs' investment decisions are influenced by GPs’ level of technology adoption, according to a recent survey by Brackendale Consulting and AssetMetrix.

Almost two-thirds of LPs (60%) would be more likely to allocate to a fund that had a strong tech-enabled partner for their middle and back-office activities, according to The Brackendale Private Equity Technology LP Sentiment Survey H1 2022. 

Just over 60% of LPs noted that GPs' technology adoption is a key factor in their decision making when deciding whether to allocate capital. This adoption of technology includes the GPs’ usage of reporting, data analytics, and communications facilities.

A large majority of LP respondents cited data management and reporting standardisation as the main challenges that their investee funds face. Particularly in regards to reporting requirements for ESG and co-investments.

Only 17% of LPs surveyed said they receive replies from their GP fund managers within a day from when the requests are made. A greater 77% noted that it takes their fund managers between two days and a week to respond to their requests. 

Fay Margo, CEO, Brackendale Consulting, said: “Technology is becoming omnipresent in the modern private equity world, and it is encouraging to see LPs becoming aware of the role that technology plays within their investment processes. However, GPs still lag slightly behind in the adoption of technological tools, leaving them with some work to do.”

Gilles Pelosato, CRO, AssetMetrix, added: “As one of Europe’s leading accelerators for digital transformation in private markets, AssetMetrix is pleased to see LPs placing importance on the technological capabilities of their GP counterparts. We look forward to enabling both GPs and LPs to close the technological gap that still exists in private markets.”

When using technology to assess their own portfolio, 77% of LPs find that being able to view their entire portfolio at once, is, or would be, the most helpful part of using a technology platform. A further 69% were keen on filtering options and 46% would find customised reporting portals to be of use to their investment monitoring platform. 

This article was first published by our sister title Real Deals.