Leveraging technology not only eases the burden of overseeing hundreds if not thousands of SPVs – it could also amplify your cash flow while you sleep.
Growing numbers of alternative funds are expanding, acquiring assets overseas and then seeking tax-efficient asset protection structures through the creation of special purpose vehicles (SPVs).
This means the volume of entities being managed and monitored by C-suite professionals is rising, adding to operational, compliance, risk, and cash management concerns.
Many alternative managers have thousands of SPVs under management comprising different company types, asset classes, and jurisdictions. The sheer size of SPV books is causing pain at the top. Clients increasingly tell us that it’s overwhelming to collectively manage and oversee so many entities in multiple jurisdictions.
SPV management and centralized services made easier–the cash management angle
We’re also finding that CFOs are not always aware that they could achieve more monetary value from their SPVs–effectively making money as they sleep.
As each SPV generates a degree of cash movement, fund managers tell us they want to see where their aggregate cash is located. With inflation and interest rates rising, arguably this money could be better used overnight through a sweep at a higher rate.
Rather than deal individually with every SPV, our clients find that when they can see everything at once on our SPV Prime dashboard–rather than on a cumbersome Excel spreadsheet–they have a much clearer idea of what they’re dealing with.
That’s why we work with clients to provide bespoke SPV dashboards. In a click they can see their aggregate cash exposure in corresponding jurisdictions. Then operational managers can decide where to place that money to gain the most value.
Existing relationships with banks could spark incentives for short-term instruments offering better rates for 30 days. However, funds then have the freedom to swap if another bank is offering a different rate on a 60-day product. As more funds fully leverage their SPV data and banks are aware of this trend, more competitive offers could come to market.
There is also the question of leverage when individual borrowing is made through SPVs that require granular loan covenants, margin calls, or netting arrangements. This is particularly topical for managers and their corporate bankers or peer-to-peer lenders.
As it stands, most funds are not enjoying any of these SPV benefits; instead, they leave aggregate funds sitting in individual accounts. There is however a logical reason to do so. Monitoring and aggregating data for thousands of entities in the traditional way is arguably too onerous and costly a task. It would call for more people and more Excel spreadsheets, increasing management fees.
When an SPV event occurs, such as the formation of a new entity, an exit, or liquidation, you have the hot topic of cash management to contend with. Having a centralized SPV dashboard helps funds gain oversight and control over who they’re banking with and what their terms are, as well as identify additional cash and its outflows.
In-house SPV compliance and end-of-life liquidations made easier
Operational managers and in-house counsel have a lot on their plates. Knowing they can have an SPV compliance health check gives them one less thing to worry about. For example, they can ensure their SPVs are in good standing in all their markets, from Delaware to Singapore. Our software provides a host of services, such as aggregating all certificates of good standing, alerting managers of the next board meeting, and preparing for upcoming filing obligations.
There are other aspects of SPV management such as end-of-life private capital funds and respective SPVs that fund managers have to address (such as illiquid assets). In the coming weeks and months, we expect more detailed discussions with clients about how they can expedite and close out these existing structures in a cost-effective manner.
Why it’s time to talk SPVs with CSC
Our teams of more than 7,500 professionals around the globe are well-equipped to deliver complete, end-to-end SPV solutions across all private capital asset classes and locations. Leveraging our SPV Prime technology through data aggregation, analytics and reporting can ease the complexity of SPV management.
By coordinating centrally and delivering locally, we allow you to focus on what you do best. We provide:
- SPV domiciliation, registered agent, and accounting, including management accounting, consolidation, and financial reporting
- Bank account management, including reconciliations daily, monthly, or quarterly
- Cash projections and cash flow management
- Payment services
- Directorship services
- Regulatory reporting
- Compliance calendar and dashboard