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The London Stock Exchange Group (LSEG) has joined a growing list of major vendors and institutions that have launched Data products to help Asset Managers better assess Private Markets.
London-based LSEG has collaborated with Private Market specialist Dun & Bradstreet to help its users better identify opportunities and risks within the alternatives space. The partnership comes on the heels of major private-market Data initiatives by companies more closely associated with public-company investing, including JP Morgan, Bloomberg, and BlackRock.
“There’s much more opportunity in Private Markets that we’re seeing right now, and that’s why people are taking notice… much more than they were five years ago,” Brian Filanowski, general manager of finance, risk solutions, and capital markets at Dun & Bradstreet, told Data Management Insight.
The surge of new Data products comes amid an expansion of multi-asset investing as a hedge against broader economic volatility and a slowdown in public listings. Despite recent weakness in equity, credit, and real Assets performance, Private Market interest remains strong.
According to Bloomberg Data, alternative markets accounted for about a fifth of global Assets Under Management in 2022 and half of all revenues generated globally. They are expected to manage as much as US$15 trillion by next year. Private Assets researcher Prequin expects the figure to be $18.3 trillion by 2027. Separate Data indicates that a third of all institutional capital is allocated to Private Markets.
Research Specialist
The slew of new products and services launched in the summer and autumn seek to address a key challenge for investors in alternatives, which also include derivatives, and infrastructure projects; a paucity of good quality Data on which investors can assess companies, issuers, and their Assets.
Dun & Bradstreet specialises in Private Market research and investor services. LSEG is betting that by harnessing the Florida-based company’s decades-long experience in collating information on officers and directors, ownership insights, and financial performance – and complementing that with its own Data on Private Equity and deals – it can furnish clients with the tools they need to make better Investment and Risk Management decisions.
Crucially, the tie-up will enable LSEG to leverage Dun & Bradstreet’s proprietary D-U-N-S Number regime, which attaches an identifier code to about 580 million private companies around the world.
One of the biggest hurdles to participation in these markets is the absence of globally recognised legal identifier systems for entities. This can prevent investors from linking information on Assets, corporate events, and Financial Data to individual companies.
It’s anticipated that the mapping of LSEG Data to D-U-N-S Numbers will help financial institutions, which largely have systems built on the standardised Data rigor of public markets, to participate in the less structured alternatives space.
“We can supplement that D-U-N-S Data with information such as what activities that company is engaging in, are they getting a loan, are they involved in some kind of M&A activity, what news is being published about these companies, who are their investors on the Private Equity side?” Jenn Giacobbe, LSEG Global Head of Investment Banking and Sell-Side research, told Data Management Insight. “Those are also signals that help us better identify the companies that are going to matter to our clients.”
Opaque Market
The expansion of Private Market Data products has been largely driven by the difficulty in accessing information on companies. They are usually much smaller than their public counterparts and less likely to store their own Enterprise Data in the sophisticated systems that typify institutional tech setups. As well, those companies are governed by less stringent Reporting Regulations and so are under fewer obligations to collect granular enterprise and operations Data. With the expertise needed at scale to prise open these opaque markets, many financial institutions look to third-party providers for answers.
Among them, New York-based start-up BlueFlame AI launched a Generative Artificial Intelligence (GenAI)-supported product in the summer that gives structure to the troves of unstructured Data that private companies have on their systems. Its Nexus platform enables firms to unlock information stored in board decks, fund documents, and other irregular sources, then parse it into a form that can be ingested into their systems, tabulated, and queried.
Also, Bloomberg has packaged many of its Data tools into services designed for Private Market participants, including the creation of syndicated loan indexes to help investors navigate one of the more esoteric corners of the private space.
Going it Alone
Larger institutions, too, have entered the Data fray.
BlackRock, the world’s biggest Asset Manager, launched its own Private Markets servicing platform, eFront Provider, last month. Financial services giant Apex Group has been integrated into the tool to facilitate a two-way exchange of Data with BlackRock’s Private Market clients.
The platform seeks to help clients overcome limitations imposed by legacy technology systems that can’t be retooled for the new tide of Data reaching their systems.
“Within Private Markets, access to streamlined shared workflows based on a consistent dataset is a key challenge for Asset Servicers and Asset Managers,” Tarek Chouman, BlackRock’s Global Head of Aladdin Client Business, said in a statement. “With eFront Provider, we are helping Asset Servicers navigate the complexities — and empowering them to scale, reduce operational risk, and collaborate seamlessly with their general partner clients.”
JP Morgan recently took the covers off its Private Market Data Solutions (PMDS), a Data Management service that seeks to simplify the collection and integration of Private Market information for institutional investors.
Embedded within the investment bank’s cloud-based Fusion Data mesh, the PMDS deploys AI- and machine learning-based algorithmic solutions to clients’ data-management workflows. It helps to improve Data Quality and applies standard identifiers to enable its integration with other datasets.
ESG Challenge
Sustainability investors are also taking a deeper interest in Private Markets, spawning a similar growth in the emergence of ESG Data provision. Dun & Bradstreet has an interest in this Data realm too, recently inking a deal with Intercontinental Exchange (ICE) to provide climate risk information on millions of privately held companies. The service has been described as one of the “Broadest Climate Data offerings available on the market across public and private companies”.
Again, the backbone of the service will be the D-U-N-S Numbers, upon which climate and transition information garnered through ICE’s geospatial Data platform can be mapped. The fruits of this collaboration will be integrated into the ICE Climate product.
The challenges for sustainability investors in Private Markets are compounded by the paucity of good quality, standardised Data – a challenge shared within public markets.
“Private companies are increasingly producing sustainability reports that provide valuable insights into their ESG performance,” Yann Bloch, Vice President of Product Management at Data Management provider NeoXam wrote in Data Management Insight earlier this year.
“However, these reports come in various formats, use different terminologies and offer varying levels of detail, creating a complex, unstructured Data landscape. This lack of standardisation makes it difficult for Asset Managers to efficiently extract and utilise the Data, hindering their ability to make informed investment decisions that align with ESG criteria.”
Blurred Lines
The creation of Data solutions for participants in Private Market is expected to continue as a broader range of institutions see value in such Investments. A recent white paper written by the World Economic Forum with Accenture and Lazard, observes that the rising volumes of capital allocated to these markets mean that “comparable and reliable information will be core to coordinating buyers and sellers”.
Among the expectations of new investors in the sector will be greater transparency into aspects such as market liquidity, better standardisation of Data, easier access through technologies such as APIs and greater partnerships with public market regulators, the white paper concluded.
This latter observation will chime loudly with investors who have a history in public markets but are moving increasingly into the private space. BlackRock, for instance, is pitching eFront as complementary to its Aladdin Investment Management technology, provide platforms that together “unify public and private Asset classes to create a multi-asset technology solution”.
“There is a blurring of the lines between public and private,” LSEG Group Head of Data Strategy and Management Debbie Lawrence told Data Management Insight. “We try and service the public market demands and the private company demands but I can see a world where clients will want to choose from a subset across the two. So, having a service that allows clients to take public and private in the same standard is incredibly powerful.”
