More Than a Quarter of Private Markets Professionals See Deal-Making Improving in 12 Months or Less

• 76% of global respondents believe market conditions will improve within five years, with the use of SPVs also set to grow
• Private debt professionals are the most optimistic regarding market conditions
• Greater deal complexity and a growing burden of regulation are impacting use of SPVs
• Outsourcing to SPV administrators set to grow, aided by more sophisticated technologies and platforms

HONG KONG SAR - Media OutReach Newswire - 19 June 2024 - New research among 400 C-suite level executives and senior professionals working in private markets commissioned by CSC has found more than a quarter (29%) view conditions for deal making improving in less than one year—or that it's already happening. In addition, almost half (46%) believe market conditions will improve in the next two to five years, with deal growth resulting in the growth of special purpose vehicles (SPVs).

The study by CSC¹, the world's leading provider of global business administration and compliance solutions, was commissioned among investment professionals in private equity, private debt, real estate, and infrastructure in Europe, the U.S. and Asia Pacific. The findings are detailed in a new report focused on the fundamental role that SPVs play in optimizing private market investments.

Respondents based in Asia Pacific are the most cautious, with only 16% believing that market conditions will improve in less than one year, or that it is already happening. This differs from North America and Europe, where 37% and 33% respectively already see improvements or expect improvements in less than one year.

Among key other key findings, the growth of private debt—and the role that SPVs are playing in supporting the growth of this asset class—was particularly notable. Around two thirds (67%) of debt professionals believe market conditions will improve over the next two to five years.

"Our study has found far more optimistic sentiment among senior private markets professionals, following a few years of significant market volatility, which bodes well for the wider investment sector and global economy," notes Thijs van Ingen, global market leader, CSC Corporate and Legal Solutions. "Private debt professionals were much more optimistic than their peers working in different sectors. This supports the trend we are seeing more generally in the market, which sways towards private debt."

The study from CSC comes at a time when private markets have started to recover following significant volatility and headwinds in recent years. Use of SPVs—critical structures at the center of the global investment system—have also grown, but now with managers facing greater complexity through greater multi-jurisdiction regulation, stricter reporting requirements and a need for richer levels of data granularity.

"SPVs have become increasingly complex, and far more work needs to be done to manage them—particularly when you factor in new regulations and requirements," comments Delphine Jones, managing director of CSC Client Solutions. "However, the SPV ecosystem has also become relatively inefficient, with a wealth of unnecessary complexity. It is in this environment that outsourcing to specialist SPV administrators is also growing."

CSC research revealed that most private markets firms that do outsource currently use two outsourcing partners, with a view to increasing this to either three or four partners in the next few years. The top criterion for respondents when looking for the ideal SPV administrator are reputation (66%), technology and reporting data (65%), and having a sophisticated technology platform (64%). Respondents across both real assets and private equity and debt stated that they would most like technology to deliver a centralized portal for a single view of all SPVs (57% and 59% respectively).

"Many cited technology as an important factor when selecting their SPV administrator, marking the importance of technology when it comes to SPV management," says Thijs van Ingen. "This includes optimizing deal sourcing, investment, aiding portfolio performance, and many other areas."

"Regardless of strategy, fund managers are aiming to have a tech-enabled approach and are looking to achieve as close to an all-in-one administrative solution as possible," adds van Ingen. "While it may seem advantageous to use multiple outsourcing partners, having a large number of partners can actually make processes even more complex. Consolidating your SPV administration to one outsourcing partner globally helps to streamline your processes."

¹CSC, in partnership with Pure Profile, surveyed 400 (between Dec 2023-Jan 2024) C-suite level executives and similarly senior professionals working in private equity, private debt, real estate, and infrastructure. Respondents were equally split between North America, APAC, and U.K. and Europe.

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