Consolidating with Alternative Investments Manager

ATP is a self-governing pension institution responsible for the management of EUR 125 billion, playing a vital role in Denmark’s guaranteed state pension program. With 5,2 million members, ATP serves almost the entire adult population of Denmark.

A SimCorp Dimension client since 2000, and a user of the Alternative Investments Manager since mid-2019, we caught up with Morten Holst Kruse, Head of Business Systems who plays a leading role in implementations and system management, and Philip Bæk Christiansen, Head of Finance and Tax, who works on the business side, managing teams that use SimCorp Dimension on a daily basis.

Internal platforms no longer fit for purpose

Before 2000, ATP had an internally developed system. With an ambition of scaling up everything from investing broader to day-to-day reporting, this ambition demanded a consolidated system that was not built internally.

As alternatives increased, so did requirements

ATP has a long history investing in alternatives such as real estate, infrastructure, private equity, natural resources, and credit. ATP started to invest more  into alternative investments in 2007 and by 2011, it was such an important part of the business that they needed a dedicated system to support this business area. At the time, SimCorp’s Alternative Investments capabilities were in their infancy and were not able to support ATP’s requirements. They opted therefore for a more specialist provider, while keeping an eye on the progress of SimCorp’s alternatives solution.

As their investments in alternatives increased even further, so did the complexities of integrating the third-party solution with the existing investment management platform. At the same time, SimCorp’s Alternative Investments Manager had come of age and had the capability and product roadmap requirements to make it a comparable replacement possibility to their existing system.

With a goal to consolidate systems and have a single source of truth from SimCorp’s IBOR, ATP made the business case in late 2018 to switch over to SimCorp’s recently released Alternative Investments Manager.

Consolidation played a big role

Managing a second system created a lot of extra work in terms of system management (upgrading, service surveillance, etc). But it also created key man risk, as the number of users on the other system was only a handful, while SimCorp Dimension had roughly 85 users, including a team of system experts.

Their SWOT analysis concluded that switching to SimCorp’s Alternative Investments Manager would reduce complexity and position ATP for future benefits. It also supported their preference for a single solution strategy. A key requirement according to Christiansen was the “need to be able to look through fund structures and subsidiaries and be able to decompose into separate investments regarding valuation, call/distributions, cost, tax, commitments, static data, etc. Everything is much easier, now that everything is integrated into SimCorp Dimension.”

A smooth and quick implementation

With a tight deadline due to their contract expiring with the third-party vendor, ATP needed to move their alternatives over to SimCorp within 3-4 months, something that was achieved within time and budget.

Having a solid team working on the project was vital. ATP had a dedicated team of both business experts and SimCorp Dimension experts working efficiently together alongside skilled SimCorp consultants to move the project forward. “It was important that we had the right skilled experts involved in the project from our side. It meant that they could solve a lot of the challenges quickly, and were also really good at scoping the project and keeping it focused on the must-haves to meet the tight deadline,” says Kruse. With such a short deadline, the team also made sure that they had a clear and prioritized scope so that they could stay focused on covering all their most basic needs.

Over the past few years, SimCorp has worked on developing standardized delivery packages, so that clients can get up-and-running much faster. “This was the case with Alternative Investments Manager and was a great help to us,” says Kruse. It meant that the implementation was much faster than when everything needed to be customized. “I’ve been part of many system implementations, and this was certainly one of the smoothest.” Christiansen reflects on the project.

Using alternative investments manager

Every day ATP uses SimCorp Dimension for registering cash calls and distribution, including controls. On a quarterly basis SimCorp Dimension is used for registering valuations, fees and carry. “And on a monthly basis we do reporting on top of the Data Warehouse sourced from SimCorp Dimension. Our financial report provides top management with all relevant key figures from business area level, over asset classes down to individual investments,” explains Christiansen.

Since going live, ATP has benefited from their one system approach. “To put it simply, we now have more transparency, less complexity, can avoid hidden risk, faster time to market, and last but not least, we no longer struggle with integration issues, which is a real time saver.” says Kruse.

From the business side of ATP, users have benefitted from easier and more substantial look-through capabilities. They are able to look at individual investments and find the valuation and characteristics of the different parts in order to get a full picture of what is going on rather than a one liner.

This functionality allows them to decompose funds for performance, risk and exposure analysis. When managing 1000+ investments in funds or as co-investments/direct, the benefit of streamlining the finance and risk processes is huge.

Looking to the future, both Christiansen and Kruse look forward to the coming improved functionality to the Alternative Investments Manager. In particular, they see a lot of potential value in automating the controls to check the carry calculation and management fees. They also look forward to when SimCorp can automate the communication between GPs and LPs. Rather than working in email and PDFs and finding different figures to then enter into the system, they look forward to more process support in interfacing GP information directly into the Alternative Investments Manager.