Three Key Trends Impacting LPs in 2021

2020 was a year like no other. It brought about huge cultural, technological and societal change and has also served to shake up the asset allocator market. We look at how the key trends from 2020 continue to impact LPs this year and their relationship with GPs and analyze how technology is responding to meet these market demands.

1. LPs require deeper insight on GPs' underlying portfolio companies

With the pandemic making travel and the regular conduct of in-person business impossible, LPs and GPs faced the twin pressures of needing to supplement the lack of in-person diligence and annual updates from asset managers with deeper data requests and a newfound need for solid technological infrastructure to get the most out of that information.

As a result, we have seen a dramatic increase in the number of questions LPs are asking GPs about their underlying portfolio companies - from more frequent performance and valuation updates to queries about operating metrics. With increased scrutiny being placed on portfolio companies, LPs need web-based dashboards and reporting to understand their exposures and risks more clearly. iLEVEL is like no other software in the market—allowing LPs to easily visualize their exposure to companies across their fund, direct and co-investments.

2. LPs: From data processors to data consumers

As allocators' own business models evolve, focusing on their core investment business is a top priority. As a result, in 2020, we saw more discretionary advisors, fund of funds and sophisticated investors choosing to delegate data collection to best-in-class service providers like us. Being more informed, making data-driven decisions and holding managers to account for their financial performance is turning LPs from data processors into data consumers.

We have responded to this trend by investing in an expansion of technological and process capabilities within our managed data services offering. Not only are we processing data on more than 9,300 active funds a year, we're doing so using cutting edge technology; processing data with greater speed and precision and expanding our breadth of coverage to keep pace with our clients' evolving needs.

3. ESG metrics are in demand

Despite the focus on the pandemic, ESG issues became more prominent in 2020 and LPs have responded by demanding greater detail from managers on the Environmental, Social and Governance metrics driving their firms and their underlying investments. A growing number of LPs have helped us shape iLEVEL to easily collect and visualize ESG metrics from their GPs, especially as new ESG disclosure regulation begins to take shape across jurisdictions.

As we head into 2021, we will continue to collaborate with our 250+ global LP clients to ensure we are evolving iLEVEL in line with their requirements and market trends. For more information, please visit our dedicated webpage or contact PCMGlobalSales@ihsmarkit.com.

Posted 23 February 2021 by Charles Silva, Head of Commercial Strategy, Limited Partners, Private Markets, S&P Global Market Intelligence

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.