Dutch pension administrator and asset manager MN wanted to administer its private equity (PE) and real estate (IOG) investments with a more dedicated, reliable and service oriented system. Timo Zomerdijk, Head of Valuation, Reporting & General Ledger at MN states that, “As Excel was not a preferred system for administration, we started to search for a complete and solid system to administer both investment segments so that data could be derived from the system in a structured and orderly way.”
MN’s main requirements were that the solution could create reports, make calculations and store all static data at both fund level and underlying level (building and company level). Timo Zomerdijk stated that, “For us, it was not a question of reducing costs; it’s an investment in quality, more and better data, up-to-date data, accessible data and also for the fund manager to run his portfolio more efficiently.”
The SimCorp solution met all our system service requirements. As it can also communicate with our main asset management administration system (SimCorp Dimension), the choice was easily made.
Already a SimCorp client, MN looked to its current investment management software business partner for a solution. Following a presentation on SimCorp Dimension’s Alternative Investments solution, SimCorp was asked to initiate a proof-of-concept.
Detailed reporting and automatic valuation as key drivers
The proof-of-concept consisted of the full administration of six MN funds, three of which were private equity and three real estate funds, including basic reporting. End-users of the PE and IOG business segments approved the proof-of-concept.
The requirements for the new administration were analyzed and based on the MS Excel administration of the IOG segment. Timo Zomerdijk says that, “Besides the transaction administration, detailed reporting and automatic valuation based on transactions were the main drivers.”
Registering transactions more effectively and flexibly
The new method of administering its alternative investment transactions with dedicated transaction codes and screens enables MN to register each transaction in more detail, and with a payment attached directly to each transaction. These payments are then approved and ultimately reconciled with the immediate business transaction attached to it.
A number of fee types like management fees that could only be registered as part of a capital call earlier can now be registered separately; the flexible definition of these expense (and income) types ensures that every type of fee can be registered separately in SimCorp Dimension.
Generating added value for clients
The new administration allows for more detailed information to be registered. Not only do the funds that MN invests in on behalf of its clients contain useful information; the investments in buildings and companies by those funds provides detailed information that can be used for an analysis of the investments per country, region or sector, across all funds.
This information is very valuable for MN and its clients. Timo Zomerdijk notes that, “This information enables us and them to see our and their exposure on a more detailed level and then to act on it.” Setting up the funds and their underlying investments in this way prepared MN for the Fund Decomposition functionality added in one of the releases SimCorp Dimension provides clients twice a year to continually upgrade and enhance its product and service portfolio.
Creating detailed reports based on one database
Having all transaction information and fund data in SimCorp Dimension allows MN to create a number of more service-oriented reports, all based on one database. Reports can now be generated directly from SimCorp Dimension, as opposed to constructing reports based on several spreadsheets. These reports contain a number of key ratios like Internal Rate of Return, Total Value to Paid-In, etc.
Having a solid and up-to-date overview of all the private equity and real estate portfolios without comparing and merging Excel sheets is one of the gains achieved by MN. As Timo Zomerdijk notes, “Running just one system enables all the information to become accessible to all the relevant departments: the settlement and valuation departments, financial reporting, not to mention the fund manager.”
Running just one system enables all the information to become accessible to all the relevant departments: the settlement and valuation departments, financial reporting, not to mention the fund manager.
Automating the valuation process
Another key business driver for MN was valuation. Private equity and real estate fund managers tend to update their investors each quarter with regard to the value of investments in funds. This invariably means the value of the funds is not known in between the quarters.
By using the Alternative Investments solution, MN can take into account for valuation all the relevant transactions conducted during each quarter (i.e. capital calls, capital returns, fees, dividends, etc.) to generate up-to-date figures between end-of-quarter dates. This process has been automated in SimCorp Dimension, adding flexibility and ensuring that every transaction triggers an update of the market values where even backdated changes are taken into account.
Quick and easy access to all data
To allow its fund managers and middle office quick and easy access to all data, MN also opted to install SimCorp’s Portfolio Workbench solution, which provides for:
- Up-to-date market values per fund or even per underlying company
- Fund types and fund strategies
- Geographical and sector distributions
- Key ratios
Access to these up-to-date figures, combined with graphical tools and pivot tables, provides additional value to MN’s fund managers when they assess the investments and improves communication with clients when it comes to evaluating their investments.
A highly flexible and accessible solution
Implementing a new solution required a thorough look-through methodology. As is typical in project work like this, MN had a lot of questions and, as its business partner; SimCorp was there to assist in finding all the right answers. With the constant on-site help and advice of SimCorp consultants, MN found the solutions it sought in speedy and effective project implementation.
As Timo Zomerdijk sums it up, “The bottom line is that we now have an easy-to-use and accessible system that can produce at any time of the day an overview of all our private equity and real estate investments, with the latest valuations, investment regions, businesses, investment managers, called/outstanding commitments, and more.”
Headquarters: The Netherlands
Industry: Insurance and Pension
AUM: USD 135 billion (end of 2014)
Read how an integrated SimCorp solution helped MN deliver more transparency, flexibility, and value to its alternative investments offering.