Challenges in the Private Capital Markets: Part One

Today, the Ipreo Blog kicks off a three-part interview with Kevin Black, former iLEVEL CEO and current EVP of Global Private Capital Markets for Ipreo, to discuss the evolution of Private Capital Markets and the challenges facing its constituents.

Ipreo Blog: Ipreo has traditionally been focused on providing solutions to players that function within the public markets. Where does Ipreo PCM fit in?

Kevin Black: We’re building a data ecosystem for private markets transparency, disclosure and analytics that’s analogous to what already exists in the public markets.  In many ways you can think of us as the analogy to what Bloomberg, Capital IQ, Factset and Thomson Reuters are for investors in the public markets.

There are significant differences of course – most notably that the data itself is not publicly disclosed.  This is data that is confidential and private between the investor and their investment.  But the type of data involved, the way the data is used, some of the analytics required, the reporting and valuation requirements, etc. are all analogous. So what we’re building for the private capital markets is a data ecosystem that functions like that of the public markets, with the added dimension of confidentiality.   Despite the confidentiality, it offers virtually all of the same benefits — transparency, standardization, automation, efficiency, etc.

Blog: Why now?

KB: The lines are blurring between the private and the public markets. Historically, there’s been a big gulf between them, with private markets being secretive and  esoteric, and public markets being wide-open and transparent. However, over the past decade, the private markets have been growing in scale and sophistication to the point where they are getting closer and closer every day.

Most investors in private markets are also investors in the public markets, and increasingly demand the same levels of transparency, data and analytics on their private side as what they are used to receiving on the public side.  We help them get it.

Blog: But the technology on the private side lags behind…

KB: Correct. The private capital markets have been 20 years behind the public markets in the use of data and technology. Before iLEVEL came along, there really had been no systematic means of disclosing, collecting, controlling, and analyzing private markets investment data.

Blog: And now, as the private markets continue to grow, the demand for such a solution is increasing.

KB: It is. And it will continue to. But there are still some misconceptions out there that are serving as roadblocks to modernizing the private markets, misconceptions that we’re trying to solve for.

Blog: Such as?

KB: One of the primary goals of our platform, and one of the most sought-after attributes of all markets, is transparency. Unfortunately, there is a perception that private capital GPs don’t want to provide this transparency to their LPs – that these GPs see some benefit in not providing this transparency.

In reality, however, the issue is almost entirely logistical. i.e., GPs are overwhelmed with requests for data from their LPs, but lack the technology and data systems to fulfill those requests accurately and efficiently. From the perspective of the LP, this perceived lack of cooperation is due to GP secrecy; in reality it is lack of technical capability.

Blog: But things are changing.

KB: Several big dynamics are at play that are driving change in the industry, and creating tailwinds for our business.  At minimum they are increasing the pain levels of not changing, to the point where now it makes sense to implement a solution to help get control of it.

In Part Two of the interview, we’ll find out exactly what those big dynamics are, and how their associated pain points are impacting the private capital markets.

Related Blog Posts:
Challenges in the Private Capital Markets: Part Two
Challenges in the Private Capital Markets: Part Three

Visit the Ipreo Private Capital Markets page for more information on Ipreo PCM and our iLEVEL and Qval products.