Unstructured data is the bugbear of private market data managers, but one of the latest entrant to the space claims to have a solution that can tame the “nastiest” part of data retrieval – private market fund quarterly reports.
Accelex is a London-based artificial intelligence (AI) focussed FinTech that has launched a platform that can prise market-relevant information and insights from the PDF reports issued by General Partners (GPs), which manage private funds. It then takes that data and presents it in visual form for Limited Partners (LPs), the fund’s investors, which are comprised largely of financial institutions.
Simon Tang, sales manager for the Americas, said the company’s technology was built to scan read and extract data at scale and accurately from quarterly reports because they are the fundamental repositories of data owned by GPs about the performance of their funds and portfolio companies.
“That’s really the nastiest document type because you’ve got multiple layers of data – it’s fund-level data, how the fund is doing; it’s got underlying portfolio companies within the portfolio; and, you’ve got all these metrics and deal-level performance data around individual companies,” Tang told Data Management Insight. “And then if you peel that away, if you dig in even deeper, you can also get insights on how those individual companies are performing at the asset operating level.”
As such, Accelex’s model can drill deeper into the data and map it to entities and portfolio companies in ways that he says other solutions have yet to manage, Tang says. Another unique feature is the model’s ability to complement that data with historical information that enables LPs to take a long-horizon view of past performance.
Filling a Hole
Accelex was founded in 2018 and is headquartered in London. It won a US$15 million series A round led by FactSet in 2023 and now has offices in Luxembourg, Paris, New York and Toronto. Its customers include asset owners, allocators and servicers responsible for than $1.5 trillion that is invested in more than 13,000 private market funds across 4,000 asset managers.
The company’s SaaS-based technology was created to fill a hole in the private market data landscape where there is no consolidated provider, said Tang. The need for such a product became obvious as institutions began to step up their investments in alternatives and privates as a hedge against volatility in capital markets.
Such is the involvement of institutions that they are now estimated to have a third of their capital invested in private assets.
“Once you commit to a private market fund, you consistently get documents from your GPs, every quarter for the next 10-plus years during the term of the fund,” he said. “That’s a real problem because unlike equities and traditional asset classes, there is no such thing as a timely data feed. All you get from your GPs are highly unstructured documents.
“It’s a very big challenge because, if you think about some of the larger institutional investors out there, like established fund-of-funds, insurance companies, pensions and sovereign wealth funds, they’re invested in 800, 900 or more than a thousand funds. So if you just scale that out, those documents go from being a problem to becoming a nightmare.”
Human Check
Accelex believes its unique selling point is an AI agent that uses proprietary tools and algorithms to focus its view on private markets.
While it utilizes some “off the shelf” components to do parts of the AI work, Accelex’s key IPs are the intuitive workflow and private markets-specific intelligence built into the technology that enables investment data extraction which LPs need for their investment decision-making. Those outputs are checked and validated by data scientists before being passed onto clients.
“The private markets-specific AI engine is able to understand that when it comes to private markets, we’re talking about quarterly reporting, not daily or monthly,” Tang said. “The machine also realises that there’s a difference between gross and net returns, and that there’s multiple layers of investment entities and their corresponding data.
“It’s not just looking at one single return number.”
Future Growth
Tang said that demand for private market data will only swell over the years as more and more investors seek the higher returns offered by such an asset class.
“Nowadays, everyone is looking for risk-adjusted returns for their portfolio to boost their overall performance,” he said. “So private market allocations are increasing and you can see that in the macro numbers. If you look at various data sources, such as Preqin, the AUM within private markets continuously grows year on year.
“Private markets are just going to continue to grow for the foreseeable future because everyone’s looking for increased returns for their portfolio beyond what they can achieve with traditional equities and fixed income.”
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