In a recent Markets Media webinar, panellists Tom McHugh, CEO and Co-Founder of FINBOURNE Technology, Bill McMahon, Senior Partner at Private Markets Advisory, North America at Alpha Alternatives (formerly Lionpoint Group), and Gary Dmitriev, Founder of CrestPoint Strategic Advisors discussed how streamlined data management enables firms to manage unified public and private credit portfolios and ensure their operations are able to keep up with market changes

The technology landscape for managing credit operations is highly fragmented today. Funds are increasingly leveraging a mixture of both public and private credit assets, driving a need for a more unified data strategy. “The credit market was traditionally a horizontally segmented market, but there is now a verticalization trend, where asset classes that were historically public are seeing similar segmentation being supported by private capital,” says Bill McMahon.

The requirements of limited partners (LPs) are very different from the requirements of general partners (GPs) or operations teams. “Vendors historically created solutions focused on a specific workflow or solving a specific problem. As public and private markets consolidate, there is a need to shift to a platform that can run all operations from the same place and to do more with less—a recurring theme of the last 10 years,” says Tom McHugh.

An enterprise data strategy is critical to supporting evolving business landscape needs. “Creating a single golden source of data—whether it is market data on the public side, or manually analyzing issuer financials on the private side—it is very important to have a one-stop shop for regulatory reporting,” says Gary Dmitriev.

“Creating a single golden source of data—whether it is market data on the public side, or manually analyzing issuer financials on the private side—it is very important to have a one-stop shop for regulatory reporting,” says Dmitriev.

Keeping up with the pace of deals

Keeping up with the pace of deals with an increased flow of private capital, the asset manager’s ability to participate in a diverse set of underwritings is expanding. “While firms continue to spread deals in Excel, many are starting to take advantage of artificial intelligence (AI) and large language models (LLMs) to synthesize a lot of the underwriting content and disposition, leading to new efficiencies,” says McMahon.

In a poll, the audience expressed their views on the volume of private credit deals expected in 2025 with 50% expecting to see more deals next year than in previous years.

It is important to collect all the key underwriting dispositions that have gone into a deal— expected returns, underlying financials, capital structure and covenant terms. “There is a lot that needs to be actively collected and maintained to measure deal progress and to support the fundamental credit perspective. That is how we manage risk in our portfolios,” McMahon says.

Automation is key when it comes to keeping pace with deal flow, says McHugh. LLMs help firms automate the initial drafting of prospectuses, summarize committee meetings and conduct market comparisons, for example. With rising data volumes, it is an ever-increasing challenge to turn that into a workflow that can be automated. “As the number of data points to be collected goes up, and the similarity between them becomes lower, the more firms need to automate and have likeness so managers can look at disparate deals in a relatively uniform way,” says McHugh.

“As the number of data points to be collected goes up, and the similarity between them becomes lower, it becomes even more important for firms to automate and have likeness so managers can look at disparate deals in a relatively uniform way,” says McHugh.

Despite initial stigma and concerns around AI, Dmitriev says it will likely become an indispensable tool that everyone uses, much like Excel, market data feeds, or Bloomberg terminals. “Every platform in the industry has to start integrating LLMs in one form or another to help drive returns,” Dmitriev says.

Increased sophistication of limited partners

Over the last decade there has been a significant maturation in the LP space, whether that is driven by the consultants that support these firms, or from the asset owners directly as they have shifted their allocation of capital from public to private markets. LPs want to know the intimate details and terms and conditions of each asset. Managers with a comprehensive data strategy that provide the desired level of granularity will find themselves at an advantage given the increased sophistication of LPs.

“LPs have really come up to speed on the nuanced differentiations around how these assets behave and how risk is measured. They are looking to compare and contrast asset managers and the credit quality of assets that they are sourcing, as well as their performance,” says McMahon.

“LPs have really come up to speed on the nuanced differentiations around how these assets behave and how risk is measured. They are looking to compare and contrast asset managers and the credit quality of assets that they are sourcing, as well as their performance,” says McMahon.

LPs are interested in the returns per unit of risk. What are the impacts of FX, interest rates, Sharpe ratios? How do firms compare with their peers in private assets? As they become more sophisticated, they are not just asking for increased data but are also looking to do more themselves. “LPs are increasingly insourcing their own management, internalizing their own trading, and co-investing directly in some of these assets. There is a need to be transparent, to have alpha and be able to show why they have alpha,” says McHugh

Part of the increased sophistication comes from recent college graduates in the finance and accounting space who are more technology savvy than previous generations and can understand, if not build statistical analysis tools. This raises expectations about what can be done, says Dmitriev.

LPs will impose more frequent and more specific reporting requests. “They might request files in a certain format to be delivered at a regular cadence that are then going to be ingested into their own systems so they can run analysis on what is being reported, rather than just relying on a PDF being sent to them,” Dmitriev says.

LP expectations are going to be higher on deploying capital quickly, optimizing portfolios, and reacting to market risk factors. The ability to meet these demands will serve as business differentiators which will play itself out in the returns investors see. In short, LPs are becoming more technologically enabled and their expectations are higher. Without a comprehensive data strategy, it will be challenging for asset managers to meet these higher expectations

Service providers act as data bottleneck

The accessibility and timeliness of information from service providers (such as fund administrators, custodians, trustees, outsourced loan servicers) acts as a bottleneck for asset managers looking to provide timely reports to investors. Service providers can onboard and work in a consistent and process-driven way, but they lack flexibility when managers need things to change. Most administrators currently lack the technical infrastructure and capabilities to provide live visibility on their activities.

“In a perfect world, there is a co-sourced model where service providers are an extension of the team. They perform all the investment accounting, and fund accounting, but asset management firms have real-time insights into that activity. The closer we can bring the asset management relationship to the fund administrator relationship—which is a heavily evolving dynamic right now—the more organizations will be able to scale and drive profitability,” says McMahon.

The industry needs to become more efficient with regards to partner relationships and their technical capabilities. Asset managers need to go into these partnerships with a well articulated strategy regarding what information they need, in what format, and how often. “When choosing service providers, it is important that asset managers lay out their data and technology requirements upfront, and providers are going to have to evolve,” says Dmitriev.