Press Release 3 minute read

TMF Group launches report on the state of the private funds industry

02 December 2021

TMF Group, a leading provider of administrative and professional services - together with Private Funds CFO – has launched CFO Insights 2022, a global survey on how private funds CFOs view the current state of the industry.

This special report offers a deeper understanding of new trends and challenges, and looks at how senior finance executives prioritise factors such as outsourcing, ESG, cybersecurity and technology.

The results

Analysis reveals that fundraising has surged over the past year, as the US and global economies rebound from the shock of Covid-19. In fact, almost three quarters of CFO respondents currently raising a fund are aiming for a larger pool of capital than for Q4, reflecting the buoyancy of private markets.

Another important finding is that back office teams are busier than ever as Limited Partnerships (LPs) increase scrutiny on how firms manage their investments – and with larger funds comes greater regulatory requirement and increased exposure to investor scrutiny. The study also shows that investors are increasingly focusing on firms’ ESG credentials during the due diligence phase.

Increase in outsourcing

To support the increase in fundraising and reporting requirements, CFOs are turning to third parties and technology to meet the demand. The pressure on back office teams, coupled with the challenges hiring the right staff while keeping payroll costs under control, means that outsourcing remains a logical strategy. The evidence shows clearly that CFOs at fund managers are ready to outsource more functions now than at the same time last year. 

In fact, the past year has seen a significant rise in outsourcing across the board and there are plans to do more. Almost half of firms noted they plan to increase the outsourcing of IT, fund accounting and compliance. In addition, the proportion of firms planning to increase the outsourcing of compliance rose from 27% to 40%.

Key trends

Overall, the key trends highlighted in the report include:

1. Outsourcing grows as firms offload non-core functions

Due to pressure on back office teams, the past year has seen a significant rise in outsourcing across the board, with a large proportion of firms planning to increase the outsourcing of compliance, fund accounting and tax.

2. Scouring the globe for investors

Over half of respondents said that European LPs will make up a larger share of their investor base at the next fundraise, while around one third expect Asia-Pacific and the Middle East to provide more investors.

3. Fund size matters

This year sees a rise in firms reporting that the next fund will be larger than their current vintage. Some 73% of respondents expect their next fund to grow in size and less than 6% of respondents expect it to be smaller.

4. LPs probe deeper

LPs’ due diligence requirements, and cybersecurity measures, are increasing and becoming more complex every year. In particular, investors are stepping up their focus on firms’ ESG credentials with nine in 10 respondents said they are ‘always’ or ‘sometimes’ asked if they have an ESG consultant.

5. Firms battle to increase headcount

With intense fundraising and dealmaking activity, along with the ever-increasing list of investor requirements, back office teams are busier than ever. As a result, firms are expecting to grow back office teams, with those adding more than one hire more than doubling compared to last year.

6. Managers remain tepid in welcoming waterfall technology

The past two years have seen a modest rise in firms adopting technology for waterfall calculations. While the share of firms that say they use technology has reached 18%, up from just 6% two years ago, two thirds remain steadfast in rejecting automated waterfalls.

7. Advanced technology remains a future aspiration

Cloud computing is becoming ubiquitous – 55% of firms have implemented this technology, up almost 10% from last year. But more advanced forms of technology remain largely absent with only 4% of respondents claiming to use machine learning tools, and AI and robotic process automation used by less than 3%.

Media Contacts:

Giampaolo Arghittu, Global External Communications Manager,
T: +44 7983314989

Daniel Resendes, External Communication Executive,
T: +55 11 9 7477 5453

Private Funds CFO Contacts:

Chase Colum,
T: +1 212 7968336


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