The Drawdown Awards winners: Linnovate Partners

The Drawdown speaks to Henry Lin, CEO and founder of Linnovate Partners, winner in the Fund Administration: Technology & Innovation category at The Drawdown Awards 2023.

How have you invested in technology to differentiate yourselves from competitors?

The role of fund administrators is evolving beyond the traditional middle and back office function to include more strategic and value-added services. This might include insight into industry trends and best practices supporting fundraising efforts, as well as helping clients navigate complex regulatory environments.

Investors now demand more transparency and accountability from their fund managers, so fund administrators will need to adapt to meet these changing expectations.

Our core team comes from a very tech-savvy background, so we know exactly what we need to do when it comes to automation. We focused on automating what we called the front operations, making sure our team can be as efficient as possible when it comes to processing the client’s dataset and doing capital call distribution operations.

When a lot of people talk about automation technology, they mean moving things to the cloud. But we started in the cloud. Instead, we spent our time and investment on streamlining processes that were not working for our clients.

What are some of those processes that you identified as not working for your clients?

If you don’t do digitalisation properly, you don’t manage data efficiently. We are leveraging advanced software and tools to make data management more efficient, and also automating the processes of capturing, validating and consolidating data. We have so many funds under administration that without this technology in place you create a lot of risk of human error.

We are also focusing on compliance because the regulatory side of things is increasing year on year and that's not going to go away. We have invested in our integrated compliance platform that can talk to our internal operating platform along with the KYC platform. The process is all inside the system.

A lot of fund managers would usually buy a system to do that. But given our background, we have the technology and a whole R&D team to do that ourselves.

Linnovate has grown its headcount and footprint significantly – what is driving the growth opportunity in the fund admin space?

We don’t just categorise ourselves as a fund administrator but as a tech-enabled asset services provider. So we also offer portfolio monitoring, regulatory compliance, investor services and consultancy services. Every service we offer helps us to expand our market coverage.

I think there are a few market factors driving growth in fund administration. First, private equity investment has become increasingly popular with investors over the past decade, with an increasing number of funds being launched. Secondly, the regulatory environment has become more complex due to a growing number of reporting and compliance requirements. Finally, investors are demanding greater transparency and better reporting from the fund managers, requiring more advanced analytics and reporting capabilities.

This presents a significant growth opportunity for us, with robust technology platforms and a global presence to support our clients’ needs. Linnovate’s growth in headcount and global footprint is definitely driven by a desire to capture a larger share of this growing market.

Fund administration is highly competitive with lots of market consolidation – how does that influence your strategy?

I focus on what we can do better for the clients rather than how much M&A competitors are doing. Consolidation among fund administrators is likely to continue. Last year, firms were seeking to obtain economies of scale or expand their service offering.

This may create challenges for smaller firms that lack the resources to compete effectively but could also create opportunities for niche players that can differentiate themselves based on specialised expertise or technology platforms.

For Linnovate, we are also keeping our eyes open for strategic investment opportunities where we can add value and uplift technology solutions to create win-win situations. We have massively increased our technology resources and we will be rolling out a lot of new features during the next six to 12 months.