September 28, 2017
Cybercrime is growing across the Private Equity and Real Estate sector. Cybercriminals are more sophisticated than ever in their evolving attack methods, as we have seen from the recent WannaCry and NotPetya attacks. Regulators including the FCA and SEC are now starting to put a spotlight on requirements for preventative measures.
In our latest webinar, eSentire’s Founder and Chief Security Strategist, Eldon Sprickerhoff, and David Bailey, Group Head of Marketing at Augentius, discuss how the current threat landscape might affect Private Equity and Real Estate fund managers, and the essential best practices to minimise your firm’s vulnerabilities. View the webinar slides and recording below:
September 15, 2017
Augentius survey of investors and managers reveals snapshot of industry sentiment
- Political volatility having little effect on US managers’ ability to raise funds from foreign investors, and managers are sanguine about the prospect of a Fed rate rise
- Overall global sentiment is steady, though a significant minority in all regions are finding 2017 harder than anticipated
- Delaware dominates as US managers’ choice for next domicile, with Cayman falling behind
- US leads the charge on cybersecurity, with a majority of European and Asian managers still relying on PDF/email despite the increasing threat
Political instability in the US is having a negligible effect on US managers’ ability to raise funds from foreign investors, according to research from Augentius, one of the world’s largest independent private equity and real estate fund administrators. The findings come from Augentius’ 2017 summer survey, and form part of a snapshot of sentiment across the global private equity and real estate industry, based on a survey of 100+ clients, both investors and managers. The full report can be downloaded here.
The findings reveal that, despite the political turbulence in Europe and the US, the industry is showing resilience – a majority of managers in the US, Europe and Asia, as well as investors are finding 2017 to be as or easier than anticipated.
On the specific issue of portfolio investment/divestment, this picture is reflected in the US and Europe and among investors where a majority are finding it as or easier than anticipated. In Asia, however, a slim majority of managers are finding this year more difficult than expected.
Trump, Rate Rises, and the CHOICE Act
Fears regarding political instability following the shock November election result appear to be having little concrete effect on US managers’ ability to raise funds from investors, with only 16% reporting problems in this area.
US managers are similarly relaxed about the prospect of a further rate rise, with 84% saying they expect it to have negligible impact on deal flow.
Industry opinion regarding the proposed CHOICE Act – which would remove the need for PE and VC firms to register with the SEC – is sharply split along investor/GP lines. While 60% of GPs surveyed see this as a positive step, the figure is reversed for the LP community.
Ian Kelly, Group CEO of Augentius, commented: “For all the sound and fury on both sides of the Atlantic regarding the shock political developments of the last year and a half, global markets have remained relatively buoyant – and private equity and real estate is no exception. Our snapshot of sector sentiment reveals a picture of cautious optimism.
“Nonetheless despite the positives, the picture is still a mixed one – a significant minority of managers across all regions are having a more troublesome year than planned for. Going forward, much will depend on how political and macroeconomic tensions end up playing out.”
Delaware dominates as choice of domicile for US managers
The research revealed the sheer dominance of Delaware as a domicile choice, with over 70% of US managers indicating that they plan to domicile their next fund there. A mere 7% plan to domicile in the Cayman Islands, perhaps reflecting its diminished status as a domicile following the regulatory tightening of the past half-decade.
Cybersecurity and transparency
The research also provides insight into the extent to which the industry is adapting to new digital technologies, as well as how it is responding to demands from investors and regulators alike for more detailed information.
Among other factors, an ever-increasing cybersecurity risk is driving the industry away from the use of unsecured emails and PDFs towards the adoption of secure online investor portals. The research reveals this transition is very much still underway. The US is ahead of the curve, with almost half of managers now using investor portals. However, a majority in Europe and Asia continue to use older, less secure methods, with Asia in particular lagging behind.
Ian Kelly, Group CEO of Augentius, commented: “Although it’s good to see progress in this area it’s clear that the road is still only half-traveled. Secure investor portals and similar innovations are the future of the industry and will become increasingly business-critical as cyber threats escalate. The appetite is there among investors – almost half of the LPs we spoke to expect to receive information in this way, yet only 35% currently do so.
“It isn’t just about cybersecurity – investors want to be far closer to their investments than in the past. Around 35% of the LPs we asked find themselves routinely requesting additional information, and worryingly around 1 in 5 never receive it. It’s a relatively easy way for managers to get ahead of the curve and position themselves strongly in an increasingly competitive and uncertain market.”
June 14, 2017
Recent events at London Bridge, the location of our London office, required us to implement Disaster Recovery and Business Continuity Plans. However unfortunate, from a business point of view, such events prompt us to constantly review and develop our disaster recovery procedures and ensure they are sufficiently robust. This article gives a brief insight into the action taken, what worked and what didn’t.
On the evening of Saturday 3rd June, a major terrorist atrocity occurred at London Bridge – the location of our London office. This involved people being hit by a van on the Bridge itself, in front of our office, and a number of members of the public being stabbed in the location including one stabbing outside the rear entrance to our building. As a result of this, our office was immediately evacuated of all security staff by the Police and put into the “secure zone”. All access to the building was precluded to facilitate the collection of forensic evidence.
The initial reaction
Throughout Sunday 4th June the premises status was monitored in conjunction with our landlord’s agents and by late afternoon it became apparent that access to our London office remained unlikely. The London Disaster Recovery (DR) team met via conference call at 1630 and plans were put in place, on the basis that the building would continue to remain “out of bounds” for the next 24 hours. This included the activation of our DR site and preparation of IT systems to allow staff to work from home. Finally, all staff were advised via our DR notification system of the likelihood of the implementation of DR procedures and not to travel into London until further notification.
The DR team met again via conference call at 0700 on Monday 5th June, having monitored the situation since 0600 in conjunction with the premises manager. It was confirmed that access to our London premises was not possible and as a consequence, our DR plan was implemented. Staff were advised of the situation at 0730, as promised and all clients were emailed at 0830. The client emails were supplemented by calls, from our Client Service teams, with clients from 0900 onwards.
Business as usual
By 0900 60% of our Client Service staff were either logged into Augentius’ systems at home or present at our DR site (the vast majority working from home) – with over 95% being operational by 1000. Although there were some slight delays, all client deliverables were achieved during the course of the day. It was not possible to re-direct 100+ telephone numbers in the shorter term (the event was not expected to last more than 48 hours maximum) and as a consequence Augentius staff communicated to clients via email or mobile phones. The office reception number was transferred to a mobile phone and all calls answered and dealt with.
Whilst access to the building was made available during the morning, only one doorway was open – precluding the use of the office (two separate exits are required under Health and Safety Law to facilitate an easy evacuation in the event of fire/another event). In any case, the DR team had already made the decision not to relocate staff until the next working day to prevent a loss of useful time. Whilst a 1600 call was scheduled for the DR team to plan the next 24 hours of working, the Police relaxed access to the building at circa 1530 and our offices then became fully usable. As a consequence, the call was cancelled and a message issued to all staff at 1630 advising that the office would be open for “business as usual” on Tuesday 6th June. Clients were advised by email of the updated situation prior to 1700.
All in all, the DR event was successful. Our staff were kept informed at all times (in a survey over 80% responded that our communications were either “good” or “very good”); our clients were kept fully informed; our technology, in which we continue to invest substantial sums, allowed effective working either at home or at our DR site without any issues and all client deliverables were achieved.
As with all events such as this, there are learning points and our review process is ongoing. These include:
(i) Due to holidays/personal events, it was difficult to get in touch with some DR team members over the weekend – this has been discussed and alternative lines of communication are being put in place.
(ii) We were unable to ascertain, either through our own systems or those of the London Bridge office, whether any of our staff had been caught up in the event – processes are being put in place to achieve a better response rate from staff and to be more aware of “missing” staff to facilitate investigation
(iii) Some delays were incurred, by the third party provider, in the setting up of PCs at our DR location – discussions are underway with the provider
(iv) We were unable to re-route all telephone numbers – software has now been identified to achieve this and this is currently being tested
We are carrying out a further review to enhance our procedures and practices in light of this event but we are pleased to report that none of our staff were caught up in the event itself and we were able to deliver all our clients requirements during the day.
- Previous Posts:
- CYBERSECURITY WEBINAR
- TRUMP? RATE RISE? NO PROBLEM, SAYS US PRIVATE EQUITY AND REAL ESTATE INDUSTRY
- How we reacted to the London Bridge atrocity
- Wannacry – What should you be doing?
- Update of the Singapore Companies Act
- Update of Cayman Law
- Changes on the Way for UK Limited Partnerships
- Our global expansion story continues with 18% growth in 2016
- Document, document and document again…
- Augentius named Best Specialist Fund Services Solution
- Brexit – What Does It Mean For You?
- New Manager Led Products – What Are They?