S&P Global Market Intelligence’s update to its iLEVEL private markets data tool has been designed to enable firms to scale their engagements in private markets.
The financial data company is betting that financial institutions’ growing engagement in these markets is such that they will need the sort of data provisions associated with public markets. S&P Global Market Intelligence head of private markets and head of product for enterprise solutions, Iyan Adewuya, says the only way to do that is to break the “linear relationship between growth and cost”, which has so far characterised the private markets investment space. That will happen once organisations can scale their activities. And in an opaque corner of the capital markets, where insights are tied to sources such as reports and ad hoc documents, technology will be key to enabling the scaling of those operations.
“The single biggest factor that’s going to drive growth, innovation, demand and everything else in this industry, is going to be scale,” Adewuya told Data Management Insight. “It’s going to mirror other industries, like cloud providers, where you have the hyperscalers and I think you’re starting to see that in private markets.
“Organisations will raise a fund that’s the size of an entire firm, they will raise that capital, they will deploy it, they will capture it and they will do that at a relentless and massive pace. Our strategy has really to be to lean into that scale.”
Portfolio Monitoring
The latest update to iLEVEL incorporates technology that S&P Global calls Automated Data Ingestion (ADI). The new addition is designed to better enable asset managers to monitor their private markets portfolios. It helps portfolio companies to upload documents and reports and then deploys artificial intelligence to identify, extract and analyse relevant information to help clients in a range of use cases.
The tooling has been created to meet surging demand from institutions as they pour increasing amounts of their capital into private markets. S&P Global joins companies, including Accelex and ACA, which have launched products that seek to unlock data linked to the funds and portfolio companies that comprise the US$14 trillion global private and alternative markets space.
iLEVEL was introduced in 2008 as one of the first products to bring transparency to these investors. It began life as a template-based tool, which limited and general partners could send to portfolio companies in order to obtain critical investment-decisioning data.
“Before that, it was just taken as an article of faith that private markets are illiquid and esoteric and you managed them on spreadsheets,” explains Adewuya. “Investors wanted deeper insights to drive alpha but with no standardisation in data, valuations, and so on, so it was difficult to do so. iLEVEL pioneered the systematisation of private markets data collection and analytics that could drive investment insights in a more meaningful and scalable way.”
The latest iteration takes a step into harvesting hard-to-obtain unstructured data held within PDFs and other documents. It combines traditional AI with generative AI and comprises S&P Global’s own technology guide it.
The technology extracts, maps and normalises the data so that it can be turned into insights and analytics. Adewuya says that a key feature is ADI’s ability to identify and understand private market-specific words, concepts and datapoints within a variety of document types and among different forms of companies.
“What we’ve had to do is apply the nuances and the complexities of the private markets domain to these generalised technologies,” he says. “That’s been the part that’s been very challenging and actually very exciting – that’s the value add.”
Legal Identifiers
S&P Global’s own competencies have been applied especially in the key area of mapping disparate harvested datapoints to entities and assets. That’s complemented by a multi-level identification innovation that enables the back tracing of any datapoint to its source and which binds it to associated legal entities.
Importantly, he adds, the innovation allows firms to scale those processes to scour the tens of thousands of documents and reports that asset managers are sent each year from the funds and companies in which they invest.
“And it does it in a way that’s intelligent – especially that mapping step; the step of saying ‘I understand that regardless of how this particular data point is named, I can automatically match it to a normalised taxonomy of what the end user needs to understand’.”
Adewuya is keen to draw attention to the application of iLEVEL’s new capabilities to private credit, the fastest-growing corner of the private market space. Investors in the sector need to monitor a range of variables that govern the performance of thousands of idiosyncratic contracts. Describing the challenge as being of a “higher order of magnitude”, iLEVEL searches unstandardised documents, credit agreements, covenant agreements and other legal, corporate and external factors that converge within those deals.
The latest iteration of iLEVEL is the next step in what Adewuya says is S&P Global’s ambition to provide asset managers with the tools, “in one cohesive platform”, that will help them navigate the new investment environment, one in which the line between private and public markets is blurring.
“Bringing the scale and efficiency of public markets to private investments through creating a seamless total portfolio view across both worlds is the exciting next frontier we’re working on and excited about.”
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