For sovereign wealth funds and pension plans, fostering a portfolio of innovative new ventures is a powerful opportunity. You might even create your own unicorn along the way.
Investment funds, irrespective of scale or scope, must uncover innovative ways to grow and differentiate themselves while ensuring that their underlying operating models are continually fit for purpose. Fund investment strategy, private equity fund operations, and people and governance topics are now core C-suite agenda items.
Funds are increasingly expanding into new sectors, geographies, and asset classes, and rethinking engagement models with portfolio companies. Momentum is building in key areas, as funds double down on ESG investments, invest in digital and analytics capabilities, and optimize around people and organizational topics.
Our Approach to Private Equity Fund Operations and Investment Strategy
Our fund strategy and operations consulting teams work closely with private equity firms and principal investors to optimize five core capabilities:
- Mandate and Fund Investment Strategy: Which asset classes and sectors should you focus on—and where are the most promising new growth opportunities?
- Value Creation Strategy: How do you best engage with your portfolio companies to help them create more value?
- Governance, People, and Organization: What is the most effective governance model, talent strategy, and organization design to deliver on your mandate?
- Digital and Analytics Innovation: How do you integrate digital and analytics throughout your fund investment strategy to uncover disruptive opportunities?
- Operating Model and Technology: What’s the optimal private equity or principal investor operating model and technology framework to execute your fund investment strategy?
We are thought leaders in the field of fund investment strategy and private equity fund operations, helping leading firms anticipate future trends in the industry, envision the next iteration of their business models and private equity operations, and embed digital and analytics across their value chains.
Expand, a BCG specialty company, helps leading principal investors and private equity funds further improve their internal processes by providing access to the most detailed operating and technology benchmarks in the world today.
What Sets BCG Apart: Cutting-Edge Operating Models and Technology
BCG excels at reconfiguring private equity operations with new operating models and updated technology infrastructure to prime principal investors and private equity firms for success. Our holistic approach includes three key pillars: modern technology platforms based on modular architecture, a formalized data strategy and governance process designed to unlock insights, and an organization and culture shift that embraces new ways of working.
Technology and Platforms
Shifting to modern technology and data platforms can help firms consolidate and increase efficiency from their technology footprint, typically from about 30 systems on average to 5 to 8 systems. In addition, firms can realize average cost savings of 7 to 10 percentage points.
By implementing BCG’s data and digital platform, companies can scale up new digital services faster, while upgrading their core IT.
Data Governance and Insights
To close the knowledge gap and make data easier to access, firms should establish a data governance function headed up by a senior leader with the authority to bring investment, risk, finance, and other departments together so that they can align on a “single source of truth” and enforce data management changes across the organization.
BCG’s Build-Operate-Transfer is a proven method that allows companies to mobilize transformations that achieve digital at scale, scope, and speed.
Organization and Culture
To win in this new private equity operations environment, firms need to move quickly from ideation to action and empower their teams to make decisions quickly. This means optimizing and redesigning people and organizational processes, rethinking incentive and motivation structures, and embracing agile ways of working.
Our agile-at-scale framework can deliver overall employee engagement of 90% or more, accelerate time to market and new product delivery by two to four times, and reduce development costs by 15% to 25%.
Client Success in Fund Strategy and Operations
BCG’s fund strategy and operations consulting work has driven significant impact for leading principal investors and private equity firms globally, on a number of topics related to fund investment strategy. Examples include:
We worked with one of the world’s leading public pension funds to develop a firm-wide global digital knowledge management and data strategy, focused on both investment activities and support infrastructure. With BCG’s support across both design and implementation, the fund launched a best-in-class digital knowledge capability, generating 7 to 9 basis points of added value.
We helped a leading sovereign wealth fund in the Middle East redefine its firm-wide target operating model, increasing overall business efficiency by more than 30%, while increasing active intervention in business outcomes.
We collaborated with a leading global asset manager to find arbitrage opportunities in the asset-backed security markets through more accurate predictions of loan performance and defaults in auto loans. Our approach identified over $20 million in arbitrage opportunities, with 85% to 95% accuracy in predicting charge-offs and prepayments.
We partnered with one of the world’s most prominent principal investors to undertake a detailed end-to-end review of its internal operating model and technology architecture. Following our review and recommendations, the fund launched more than 38 targeted projects covering operating model and data strategy, with $5 million in benefits expected at the corporate center alone.
Our Insights on Private Equity Fund Operations
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January 12, 2022
Article
October 5, 2020
Investors must put the technology, data management, and organizational practices in place to support sustainable growth.
Meet Our Private Equity Fund Strategy and Operations Consulting Leaders
Our experts help client sharpen their fund investment strategy and optimize private equity fund operations. Here are some of our leaders.
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