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Private equity – private debt sector embraces self-serve technology

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Private equity – private debt sector embraces self-serve technology

New research* from global loan agency provider Ocorian shows the adoption of self-service technology in the capital markets loan agency sector is set to grow, but commercial understanding of the market is the most important factor when selecting a service provider.

Ocorian’s research with capital markets executives working in direct lending in the US and UK specialising in first lien loans to companies with under $1 billion annual revenue, found more than three-quarters (78%) see the adoption of self-service technology in the loan agency space increasing over the next 18 months.

Around 10% expect a dramatic increase in the adoption of self-service technology, the study by Ocorian the leading provider of private client, fund, corporate, capital markets, and regulatory and compliance services found.

However, technology is not the key factor in choosing a third-party loan agency services provider – the research shows 69% rated commercial understanding as one of the top three factors ahead of 64% who chose the technology platform in their selection.

Reporting and analytics were rated in the top three by 62%, ahead of ESG credentials on 35% and operational excellence and pricing on 32%. Just 1% questioned did not use a third-party loan agency provider.

Ashish Prabhakar, Head of Business Development, Capital Markets - Americas at Ocorian said: “The adoption of technology solutions has accelerated in the past few years and that is clearly also the case in the loan agency sector with market participants expecting further adoption over the next 18 months. Technology is important, but it does not replace commercial understanding as the study shows.”

The table below outlines the features of self-service technology that capital markets loan agency executives included in their three most important, with origination and distribution narrowly ahead of negotiation and transaction management.

SELF-SERVICE TECHNOLOGY SOLUTION FEATURES

PERCENTAGE OF LOAN AGENCY EXECUTIVES THAT REGARD THIS AS AMONG THE THREE MOST IMPORTANT FEATURES OF SELF SERVICE TECHNOLOGY SOLUTIONS
Electronic platforms for origination/distribution 69%
Electronic platforms for negotiation and /or transaction management 68%
Electronic platforms for back office/agency functions 49%
Customisable loan portfolio dashboard 48%
Data analytics tools/AI & Dashboards 47%
Document automation 19%

Ocorian’s loan administration team combines extensive market experience and first-class IT infrastructure to provide independent third-party facility agent services for new transactions, as well as successor facility agent services for existing transactions.

Its Ocorian Optics tool for loan portfolios addresses issues around the complexity of capital markets transactions by increasing their efficiency, visibility, and accessibility through unique reporting and interactive dashboard features.

Ashish Prabhakar, Head of Business Development, Capital Markets - Americas at Ocorian added: “The sustainability and scale of our business are based on the fundamentals of an incredibly strong technology backbone, enhanced by the intellectual capital of the people providing our services and driving efficient processes.

Download Ocorian’s free infographics to read all about their findings here

* Ocorian commissioned independent research company PureProfile to interview 100 senior executives working in capital markets and the direct lending market in the US and the UK during August 2022.

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