This article is sponsored by Apex Group.
Apex Group has seen the role of data and information has changed significantly over the past few years as more commercial real estate lenders and investors are looking within their existing portfolios and further afield to make more efficient and intelligent decisions based on up-to-date and sometimes even real-time information. For Apex Group, a global financial services provider, helping clients to be able to access and process this information is critical to their ability to manage their portfolios and mitigate risk across sectors and even geographical regions, says Eddie Kelly, global head of loan services.
How is better, more timely data affecting the way capital is deployed and portfolios are monitored?
As companies continue to evolve and become more sophisticated in their approach to deploying capital, they are understanding that they have an abundance of data available to them that is not being properly leveraged.
There are several reasons for that. There are certain manual elements to some of these asset classes that they’re trying to manage and maintain. At the same time, a constant flow of updates occurs in the background, so they are chasing a moving target. They have access to the raw data, but don’t always have the right system architecture or bandwidth to manage it efficiently. In order to achieve success, it is imperative that they make use of it.
But this information must be readily available. It is not something they can wait weeks or months for – as it is information that can help them to mitigate risk and make decisions quickly to either deploy capital quickly or de-risk a position.
If covid has taught us anything, it is that you need to be in a constant state of readiness to act quickly based on up-to-date information across finance, liquidity, risk and compliance. If you must wait for this information to get updated in order to make sense of it and use it, then it could be costly.
But now, managers have the option to outsource this function, while retaining access to this data every day. This gives them the comfort that the data points are up-to-date and accurate and from there, they can build custom tools and uses around the data for the entire group to leverage from operations to trading desks, treasury, finance and compliance. That is putting them in a really powerful position.
Does better data and information help lenders to get ahead of potential problems?
Absolutely. If they have better access to this data across their books, they can get ahead and make informed decisions because they know what is coming down the line. Whether it is forecasting or looking at their entire history across their deals, including examining the trends, evaluating what they are seeing or exploring where the key opportunities will lie for the next 12-24 months. It all starts with having the right tools and understanding the functions you can perform off the back of that, and the insights gained from it will all get a lot more powerful in the future.
And the borrowers play a big part of this. They also are becoming more sophisticated and, in order to take advantage of better financing arrangements, they are required to make certain information more readily available.
The blockchain element is also a very interesting opportunity to help lenders and borrowers make this information digital and be able to access it quickly, on both sides.
Is there a common service or function a lender needs to be able to stay on top of their portfolios?
The need for a middle office function is common across all of our clients. Again, this is driven by a few factors, including the lack of appropriate tools to focus on a certain type of asset class or multiple asset classes. Also, having the right people in place to do this work day-to-day can be challenging. Our clients, like everyone, are suffering from the Great Resignation, and they want to be able to find the optimum use for their people internally and have them concentrate on the tasks that they should be focused on.
Where we see the focus for that middle office function is on outsourcing the upkeep, maintenance and reconciliation of their portfolios, while retaining access to that data. This solution is something that is common, no matter what your size is or the asset classes that you’re investing in. Middle office for real estate and debt is something clients want to look at more, and it is evolving as they start to really think about how they can achieve optimal use of their people by outsourcing these components to service providers like Apex.
Furthermore, this enables our clients to scale up more easily, which is a key success factor, as the illiquid credit space has become mature and is expected to remain very competitive. Being able to respond to queries from investors almost real time and in an accurate manner, is key to the trust relationship between manager and investor. This is of paramount importance given that the bulk of the fundraising globally is directed towards established managers, through existing relationships.
Having a single-source solution provider that can operate across multiple jurisdictions is a very attractive proposition for clients, because we can bring everything together for them into one cohesive offering. By applying processes that can follow the sun and the various trading desks, while ensuring consistent systems and treatment globally, local teams can also work together on both sides to ensure a smooth operation.
What role does ESG play? Are there new products and services being created?
Apex Group has been playing a pioneering role in the ESG arena. We made one of the most important announcements in the first half of 2022, namely that we are leading the financial services industry by offsetting our lifetime of carbon emissions, becoming a carbon neutral business.
With our global platform, we feel that we have a responsibility to do the right thing and we therefore continually strive to be a responsible corporate citizen, focused on making a difference to our people, our planet and our society. In the second half of this year and beyond, we will continue to improve our ESG credentials both across our operations and in the way we do business.
Our ESG offering is an integral part of our single-source solution model. We have introduced ESG ratings and advisory services to satisfy the urgent market need for a high quality, global end-to-end independent ESG service. So far, our team has completed ESG evaluations for more than 350 GPs and LPs, 1,000-plus portfolio companies and more than one million portfolio employees.
We think that if we’re going to make a real difference, then rolling out new evolutionary products for clients is just the tip of the iceberg. At Apex, we like to be seen as a true trailblazer across the financial services industry – by practicing exactly what we preach.
Real change will only happen when lenders and investors are truly informed about what’s happening in the ESG space, have the right insights into what’s driving the ESG agenda, and are really empowered to gain greater insight into their own ESG footprints.
How are you using tools like blockchain?
We are using blockchain across several different fronts, including a couple of products that are already in production and others that we will deploy over the next two years.
If we think about how blockchain will completely change part of the funds industry and open it up to new product types, private debt is a perfect example – it takes something that is generally illiquid and makes it possible to value it on a monthly or quarterly basis. This is a massive step towards making the asset class a more transparent one, particularly in today’s macro conditions, when investors’ expectation for accurate valuations has never been higher. I think we are only at the beginning. AML/KYC have already started its Blockchain transformation, which will lay the foundation for future change.
Apex is and always has been a very fast-paced business, and we have always been broadening our products, technologies and geographies. With the acquisition of Sanne, we now have more than 80 offices globally in more than 40 markets worldwide and are servicing nearly $3 trillion of assets. We have become a global, top-tier independent service provider.
Ultimately, our goal is the same one that our founder Peter Hughes always articulated – to be able to deliver a service in a better way, in a way that no one else can. Our plans are not just about becoming big, they are about being the best-in-class. So, we are always thinking about how we can improve the client experience, enter new markets, or develop new products. It’s in our DNA to inspire and deliver positive change.
As we grow, our collective skills, knowledge and scale will continue to make us a highly credible, better alternative to other offerings in our space – but it is our ability to deliver with agility; always building on our client promise, that remains at our core and will set us apart.
How can you make data more accessible?
It’s never just one solution to fit all, so flexibility and adaptability are key attributes for getting the right fit for any lender or investor. We work with managers to understand their different requirements and develop processes and operating guides based on those conversations. We have seen a huge array of different ways that they’re set up to use this data.
Some, for example, would like online portals to drill down into data we can provide and would like us to provide a custom-built solution for them. Then, there are some clients who are looking across a huge portfolio and may have a large group of strategies and want to be able to consolidate that information into a single place – that is certainly a complex direction of travel for a lot of managers – who all require a high degree of visibility.
This is achieved via API integration to data lakes and warehouses, and the lenders can maintain access to the raw data and analytics. There is no one solution for everyone, but certainly access is key.