How asset servicing firms can benefit private equity

Now that the securities industry features a wider range of investment options, it is important for asset managers alike to be aware of funds that will best suit the interests and resources of their client-investors. This entry tackles private equity, a domain that has been witnessing remarkable growth in the past years. Private equity: Defining the term Private equity can be defined as any form of capital where the investments are made in private companies, or when a company, individual, or consortium buys out a public firm. All capital in private equities is not listed on public exchanges, and public equity in itself is delisted. Injections of capital come from retail and institutional investors, with these fund injections generally used to buy new companies, finance new initiatives and technology, or simply to add to the working capital. The role of a private equity investor For the most part, a private equity investor is in charge of raising money via limited partners through pension funds, insurance firms, and other sources, seeking out and eventually completing deals for new acquisitions, generating profits through the sale of portfolio companies, and ensuring operational synergy, low operating costs, and solid growth in current portfolio companies. Zeroing in on an investor’s company management duties Contrary to what some may think, investors do not run companies as chief executives, but may be part of the top brass in another way, usually taking seats on the board of directors and serving as advisors to a company’s management. The scope of these board duties would depend on the amount of money invested in the company, with small investments meaning a rather passive role, and larger ones meaning a more significant part to play in ensuring a company is effective and efficient when it comes to running its day-to-day business. Asset services firms can address the industry’s challenges Anybody or any firm that invests in private equity can deal with the industry’s challenges better with the help of third-party asset servicing firms, particularly those with a good mix of experience and technological know-how. Their human and technological resources often come in handy in simplifying the management of a portfolio company’s operations by taking care of all the necessary reports and transactions. These third-party service providers also act quickly and promptly when delivering this data, using the cloud and other high-end forms of technology to speed things up without sacrificing precision.