This depends a great deal on where fund managers are in their life cycle. Start-up managers without the infrastructure to administer their own funds will generally outsource. Some start-up managers do initially administer in-house but when they get to funds two and three, they often look for an outsource model rather than recruiting a bigger team and investing in technology. The advantage is that they can simply transfer to a platform that already has size and scale that they can leverage.
Many larger private equity houses are also looking at outsourcing partnerships, but for different reasons. They may have developed relationships with multiple administrators, but now they are interested in consolidation.
Some GPs, for example, may have eight or nine administrators working for them, which isn’t necessarily the most efficient operating model. These managers may be looking to create efficiencies internally, so they’re reviewing their model to identify duplications and sources of delay. Technology adoption usually plays a key role in this restructuring and rationalisation process.