Graham Paterson wants to profit from the fact that private equity is a $3 trillion business where investors still rely on spreadsheets to track and compare fund managers’ performance. “There are no other asset classes of that size which are run in that way,” says the co-founder of Edinburgh, Scotland–based TopQ Software. “It’s quite shocking when you take a step back and think about it.”
With Graeme Faulds, a former fellow partner at Edinburgh private equity fund of funds SL Capital Partners, Paterson has developed a web-based application that helps distinguish the best managers. TopQ, whose name riffs on “top quartile,” launched in September after good reviews during a testing phase by investors and private equity groups that manage a total of $70 billion.
It’s one of a handful of new and unreleased IT and portfolio management products that aim to tap demand for more and better information from an industry where managers can be stubbornly opaque. In a recent survey of 100 private equity investors by London-based research and consulting firm Preqin, 72 judged the presentation of track record data by general partners to be average at best.
Getting people to pay for private equity information tools may not be easy, though. Also available in a stripped-down, free version, TopQ quickly converts spreadsheets into graphs and pie charts. Users can compare data for different fund managers and slice and dice those numbers by geography or sector. But as of mid-October, Paterson and Faulds hadn’t sold any of their advanced analytic software packages, which start at $15,000 for one or two log-ins and climb to $50,000 for 11 to 25. “It’s nice to have, but I couldn’t say that without this we would suffer,” admits a fund manager at a large European private equity investor.
Kishore Kansal, London-based head of private equity risk solutions at interdealer brokerage Tullett Prebon, thinks such information products should be free. Kansal will soon launch a “risk library” database whose features include trading prices for more than 100 funds and advice on risk mitigation. His firm hasn’t decided whether to charge for access, which will be by invitation.
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