Leveraging Technology To the Benefit of the Private Equity Ecosystem

Harnessing the power of technology can give private equity (PE) managers and investors a competitive edge. From providing standardized and transparent deal data to supporting data-sharing and predictive analysis, these developments can be leveraged to the advantage of the whole PE ecosystem.

Information-sharing technology platforms are proving to be a reliable source for private equity players to prepare for deal opportunities and market anomalies as long as these are backed by quality and transparent data and insights.

“Data is creating competitive advantage,” says a U.S.-based technology consultant working with one of the world’s largest private equity funds. “There’s more competitive pressure in terms of sourcing deals and driving value creation for investors, so you have to be able to identify those opportunities faster than others.”

However, private equity firms have been slow to adopt digital technologies other in certain areas such as customer relationship management (CRM), according to S&P Global Market Intelligence’s 2022 Global Private Equity Outlook.

According to the report, less than half of the investors surveyed were beyond the early implementation stage and were mainly focused on CRM and digital platforms for reporting. The report suggested that private equity firms that are implementing advanced data and analytics tools to identify new growth opportunities are at a competitive advantage. 

However, insights are only as good as the quality and reliability of the data requested, supplied and analyzed. Deal activity predictions can be made through proprietary technology and insights into tens of thousands of deals.

There is now a growing interest in the debt capital markets (DCM) that is expected to result in higher demand for reporting platforms from institutional investors and corporates. This means more data-sharing and technology improvements will be required of banks and issuers for DCM marketing, due diligence and deal execution.

Digitization is gaining traction in specific corners of the financial industry. For example, in Islamic finance, digitization and automation is growing, though there is still work to be done in terms of gathering quality data.

“Digitalization is on the march in the Islamic finance sector,” according to Arsalaan Ahmed, chief executive officer of Al Rajhi Bank Malaysia. 

Ahmed told an audience at the 2022 Global Islamic Finance Forum 2022 that increased spending on technology and new digital financial services are “crucial to helping the adoption of open banking, open finance and embedded finance in Islamic investment.”

To learn more, read our newly published white paper, How Tech Boosts Fund Reporting and the Broader Private Equity Ecosystem, available here.