James Sprow | Blue Vault |
Panel Discussion on “Alts Electronic Business: A Discussion About Today’s Challenges”
The second day of the virtual Summit began with a panel discussion entitled “Alts Electronic Business: A Discussion About Today’s Challenges” with participants Angie Fisher (CIM Group), Cheryl Wheeler (SS&C ALPS), Justin Fay (Pershing) and Sara Murphy (AIX). The pandemic has accelerated the move toward technology applications in alternative investments, moving the industry away from paper processing toward electronic solutions. That move will require education and cooperation between all parties involved, from sponsors to broker dealers and RIAs, to clearing firms and custodians.
Centersky
Gary Davi who leads Centersky discussed innovation in the handling of data as it will impact the alternative investments industry. His company can show how to turn data management from a cost center to a profit center for clients. The key differentiator in the future is how organizations will have the system working for them rather than them working for the system. Centersky helps companies effectively digitize their strategic objectives and get data immediately to those who can use it to optimize efficiency. Centersky asks “What’s your tech road map? Don’t have one? We’d like to help.”
iCapital
iCapital Network’s team of Nick Veronis, Joe Burns and Kunal Shah presented their firm’s goal of making it easier for investors and sponsors to facilitate investments in alternatives. They see opportunities in distressed credit unlike anything they’ve seen before. The global corporate debt market has expanded by six times since 2002, and debt covenants have been weakened with competition among debt providers. Kunal Shah discussed strategies to pursue in the current market conditions with downgrades outnumbering upgrades by 11x. They believe the damage is done and it is going to be long-lasting. The broad spectrum of distressed industries presents opportunities. The dry powder available to invest in distressed debt is a small percentage of the opportunities available. The iCapital criteria for selecting fund managers includes experience over multiple cycles, underwriting expertise, and a track record that shows superiority over peers, with long-term perspectives. Private equity has outperformed public equity significantly during bull markets and even more significantly during bear markets.
Panel Discussion on “Alts Electronic Business: A Discussion about Today’s Solutions”
A panel discussion featuring Richard Thoeny (Docupace), Sonny Cabral (DTCC), Michael Page (Riskalyze), Bill Robbins (WealthForge) and Gordon Sommer (iCapital Network) was entitled “Alts Electronic Business: A Discussion about Today’s Solutions.” The COVID-19 environment has accelerated the trend toward electronic solutions. “Something is wrong when it takes longer to make an alternative investment than to buy a car.” How have we shifted from “nice to have” to necessity in digital processing? For a long time the alternatives industry has been a laggard in making the technological shift. Ease of use is going to be crucial in the success of digital solutions. Both Riskalyze and DTCC have seen demand for digital solutions expanding within the alternatives industry as they have already experienced in the listed markets. Thoeny asked how firms can approach improving their technology solutions from a patchwork of existing systems.
Envision Financial Systems
Envision Financial Systems’ Brian Jones and Tom Wiedecker presented their flexible and innovative systems. Their history started in the mutual fund side of investments. Now they are serving alternative investments including NTRs, daily NAV REITs, Interval funds etc. Their strategic direction is a common, open platform with product specific extensions and a surround system interface. Besides core recordkeeping functions, they offer imaging and workflow, an investor and rep portal, APIs, real-time cash availability, correspondence, and trade and bank reconciliation. With their API Point-to-Point technology they can reduce processing time for alternative investments from 20 days to 1 day. Their dashboards can be accessed on computers and mobile devices.
Docupace
Docupace’s Richard Thoeny and Michele Drummond and presented their firm’s story. Docupace is a Wealth Management Industry Leading Provider of FINRA/SEC compliant enterprise-grade solutions to digitize operations, enabling increased margin and profitability. They are the largest third-party document storage company, with over 100,000 advisors on their platform and 330 wealth management firms. Their Alts processing steps are all digital, including supervision and review. They can test their processes against state and BD rules quickly, reducing the overhead and expense of alternative investment transactions. Their advisor-facing technology facilitates BI (best interest) tracking. Their system can be implemented with minimal time and resource commitment by client firms.
Triton Pacific
Tom Scott and Brian Buehler discussed the impact of COVID-19 on their Tasty Brands portfolio and showed how their geographic diversification has actually avoided the most heavily impacted regions of the U.S. The story in their QSR segment of the restaurant market has been quite different than in other restaurant types. Interestingly, surveys show that pizza and burgers have been the food types in most demand during the pandemic. Many restaurants may not re-open, and there will be a more rapid recovery by off-premise types. Many anticipated trends will benefit Tasty Brands. They also may enjoy better leverage with landlords. COVID-19 has been “the great accelerator” in speeding up trends that were already occurring. Dine-in business has been a very small percentage of Tasty Brands’ sales. Consumers are learning certain new behaviors that will likely stick (e.g. digital / app orders). Despite the pandemic, they expect their sales expectations to meet their 2020 forecasts. Their KPIs have been positive and they are finding it possible to hire good people in the environment, putting them in a better position going forward.
NexPoint
Angela Barbera displayed NexPoint’s track record in capital raise and acquisitions and went over their current programs, including their single family rental product. Brian Mitts covered their rental collections in April 2020, with 95% collections, down just 3 bps from March. NexPoint has a Reg. D Life Science co-invest opportunity. Vinebrook is a single family home rental company that began in the financial crisis and currently has made $592 million in gross real estate investments and $238 million in the last 12 months alone. The company focuses on workforce single family rentals. They’ve grown their portfolio of houses from 4,205 in 2015 to 7,431 homes as of March 2020. April results have been excellent, with retention improving and 96% occupancy. Their markets are not dependent upon tourism, hospitality or manufacturing, and no employers with more than 5% of the workforce. Focused in states along the Ohio and Mississippi Rivers, they are finding mispriced assets with high NOI margins, doing capital improvements and professionally managing their portfolio using technology for competitive advantage.
Day 3 Coming Up
Presentations on Day 3 of Blue Vault Bowman Alts Week 2020 will include:
• SS&C Black Diamond
• Riskalyze
• CNB Custody
