The Roaring Twenties: Apex’s Experts Look To The Year Ahead
We supported clients through a challenging 2020 with consistent service levels and a growing product density and global reach. Here, our experts look to the year ahead and the key trends to watch in 2021.
Peter Hughes, Founder and CEO of Apex Group:
“As we move into 2021 we will be totally focused on supporting our clients by continuing to understand their changing needs and delivering the highest levels of responsiveness in the industry. We spent 2020, a challenging year for everyone, evolving our single-source solution to support clients across the full value chain of their business. This enabled us reach a landmark $1 trillion in assets serviced across depositary, custody, administration and under management, and I am extremely proud of our global team for achieving this during such unprecedented times.
The last year presented an unmatched stress test for the industry’s processes, technology and systems. We’ve seen significant demand from clients looking to leverage our connected approach to technology - connecting their data all the way through from investment to the investor. New remote working requirements now mean there will be no room for firms that retain legacy manual processes. We are ready to respond to this change and support clients with our digital banking and onboarding solutions; delivering the frictionless client experience we have come to expect as consumers, to our clients within the corporate banking world.
We expect to see a continued shift in buying habits with the trend toward consolidation of vendors. Clients are increasingly seeking institutional providers that can help them achieve cost and administrative efficiencies through one relationship. Our single-source solution, teamed with a nimble approach to client service, will really set Apex apart as a result.
Finally, the EU disclosure act and other regulations focused on sustainability will come into force throughout 2021 requiring companies to take their ESG impacts seriously. I am passionate that our business should lead the way in the private markets through our ESG ratings and advisory service and predict that this will be a key area of demand in the years to come. Not only will getting it right set firms apart from their competitors, more importantly, making sustainable changes is ethically the right thing to do for our planet and future generations.”
Andy Pitts-Tucker, Managing Director, Apex ESG Ratings & Advisory:
“In 2020, the coronavirus pandemic resulted in an enhanced focus for private markets’ on risks of all kinds, and subsequently moved ESG from a ‘nice to have niche’ to ‘must have mainstream’. Private markets have been seeking an independent, end-to-end offering not only to ensure relevance, consistency and longevity surrounding ESG, but also to simply create better, more resilient, profitable and valuable companies. In 2020 we launched our ESG Ratings & Advisory solution to meet this need, helping private companies to address the inconsistency in how ESG is reflected in investment choices and the absence of an accepted industry or international standard on data formats. 2021 will be dominated by new regulation, particularly in the private equity space, and we are helping our clients prepare for these requirements. The EU Sustainable Finance Disclosure Regulation which will come in to force in March 2021 and will introduce the regulatory imperative for funds to understand the ESG status of their portfolio investments and will require fund managers to report on the sustainability characteristics of their investments.”
Find out more about Apex ESG Ratings & Advisory here.
Elaine Chim, Head of Private Equity and Real Estate, Americas and APAC
“The impact of COVID-19 on the industry was significant from the outset and caused immediate disruption; maintaining business as usual while facing real obstacles such as implementing a working from home infrastructure, lack of face-to-face meetings and liquidity shortfalls became a reality among portfolio companies. The private equity industry has proven itself to be adaptable and faster at deploying capital than public markets. With so much dry powder ready to invest it is in a good position to access deals and drive meaningful recovery. The industry will have a key strategic role in rebuilding the economy through rapid, targeted capital deployment. The volume of distressed deal activity alone is expected to continue to increase, largely as a result of falling valuations creating attractive opportunities for those who have capital to deploy. In addition, public finances are feeling the strain in the wake of the pandemic and therefore private capital will remain in high demand. We expect to see a key vintage of funds resulting out of COVID-19, which will be sector specific and forward looking. In addition, the social impact of the pandemic has accelerated the industry’s awareness of environmental and societal issues, pushing forward the agenda of aligning ESG related issues with financial return and decision making.”
Renaud Oury, Chief Revenue and Data Officer
“We are excited for the next year and have a strong focus on leveraging our expansive presence in Luxembourg to support our clients in the local opportunities created by Brexit, as managers move their operations out of the UK to ensure continued access to European markets. Last year we announced the acquisition of FundRock, the largest third-party management company in Luxembourg to strengthen our existing ManCo offering for clients and expand that offering globally as part of our commitment to providing a single-source solution to the asset management industry. In 2021, Luxembourg will continue to be one of our cornerstone jurisdictional hubs from which we employ almost 750 people across fund, financial and corporate solutions. We are constantly looking to expand our business with a large variety of exciting open positions in the Grand-Duchy. We see the Grand Duchy as well positioned as a global financial services centre and the growth our business in Luxembourg is a key strategic priority for us in 2021 and beyond.”
Hari Bhambra, Global Head of Compliance Solutions
“Compliance teams across all industries face a busy year ahead with increasing regulation being introduced in a post-COVID-19 world. In 2021, management teams should continue to view risk management and compliance as a critical function to enable, rather than restrict, a business. Regulatory changes as well as global regulatory alignment can actually present opportunities for business. From a global viewpoint, recent regulatory changes have provided a statement of intent and set the agenda of priorities for 2021. These include a focus on stimulating investment and access to capital whilst navigating the ongoing uncertainty and repercussions of COVID-19. Included in this, is integrating ESG & Sustainability across different jurisdictions and timelines to direct capital flows into sustainable projects and working with businesses to guide them through the adaptations to meet the requirements and develop opportunities. Collaboration between business and compliance will enable risks to be identified and managed, but also to identify, understand and integrate regulatory changes into the business to both meet ongoing regulations but also adapt internal systems and controls to seek out new opportunities.”
Julie Ferguson, Co-Head of Compliance Solutions, Throgmorton UK Limited (An Apex Group Company)
“COOs and CFOs of FCA-regulated entities are bracing themselves for a busy 2021, with many regulatory changes on the horizon which will require implementation, while negotiating the usual annual manager and fund ‘to do’ list. Deadlines are fast approaching for the SM&CR ‘fit and proper’ assessments of certified staff and the CIMA economic substance returns which were delayed to Q1 2021 are now looming. This comes on top of managing marketing in Europe in a post-Brexit world and complying with the new regulatory burden this will create. Not to forget the arguably most significant topic for all in-scope MiFID firms in 2021: the introduction of the new UK prudential regime, tabled for implementation 1st January 2022.
Many COOs and CFOs will be returning from the festive break to an overflowing in-tray and ever increasing demands on their time, so they should know that help is at hand. Both the Compliance Solutions and the recently launched Throgmorton Outsourced CFO/COO team are closely monitoring all regulatory and industry developments and are well prepared to help our clients through this year of regulatory change.”
Aman Bahel, Head of Business Development, Europe
“This year will continue to see the impact of 2020, as well as reflecting the broader market dynamics that have been at play in European markets for some time now. We expect that Asset Managers with substance and track-record will look to expand their investment mandates, by augmenting their thesis, growing the investment teams, and increasing jurisdictional presence. In Europe, Private Markets have shown considerable resilience through a tumultuous year and institutional investors are expected to allocate more capital to private markets in 2021. In European private markets we can expect a surge in segments specifically focused on smaller buyouts, seed/early-stage technology, turnaround strategies, and secondaries as well as Private Credit providing attractive opportunities. It is expected that public markets will face continued volatility, padding the natural playground for traditional Hedge Funds. We can expect existing managers with an established track-record to benefit as they look to generate alpha and perhaps even attract additional capital. As a result of these trends, European managers will need to partner with providers that can align and scale solutions to meet their operational, technology, banking and regulatory infrastructure needs and support their multi-strategy, multi-asset class, and ESG-compliant growth.”
Paul Wilden, Global Head of Capital Markets
“Despite an often challenging year for global markets in 2020, we have continued to pursue our growth strategy and are proud to have enhanced and expanded our Capital Markets offering. As such, we are extremely well positioned to support clients and intermediaries across the globe as they plan and execute a broad cross-section of capital markets transactions to facilitate growth, respond to regulatory change and/or manage risks facing their business.
In 2021, we will continue to develop our Capital Markets offering as a leading provider of services to private equity, debt fund and real estate clients. We anticipate particular demand for our enhanced Loan Agency, SPV administration and Escrow services and are excited by the prospect of leveraging our capabilities to deliver a more comprehensive single-source solution to respond to changing market and client needs.”
2020 has been a milestone year for our Capital Markets offering with new hires and product launches. Read our blog “Apex further strengthens Capital Markets Offering” to find out more.
Michael Sheahan, Global Head – Real Estate Fund Services
“Through the coming year we expect three key drivers will dominate development trends in global real estate markets, both in the near term and for the decade ahead: firstly, we expect strong capital flows into alternatives, which provide comparatively attractive yields for the ever increasing institutional capital requiring deployment. As a result, we anticipate the geographic expansion of the institutional real estate investment universe to continue. Growth areas in particular will be the alternative real estate sector, (student housing, care homes, social housing etc.) and logistics, data warehouses, and assets that support technology enabled economies will perform strongly.
Secondly, real estate markets will be shaped by fundamental technology-enabled social changes and we will continue to see the impact of the pandemic with further shifts in how we use real estate. The role and use of workplaces will shift as lines between social and work life continue to blur. The changes to where and how people work will have long-term effects on residential, office and collaborative work spaces.
Finally, we expect ESG consideration to further penetrate alternative asset classes in 2021 - traditional financial metrics are now seen by investors insufficient to monitor commercial performance whilst societies are demanding their regulators establish more structure and control around the ESG impact of businesses. We expect real estate and infrastructure assets that support and meet the needs of ‘green economies’ to outperform other real asset segments.”