Private Ties: Technology Rises in Private Equity

 

Crawl, Walk, Run
Pioneering firms in the space, though, have long been attuned to technology’s advantages. Coller Capital, a global investor in private equity secondaries, established in 1990, provides a creative model of how firms can advance technology’s role in the business. The London-based firm primarily develops its own IT solutions, but two years ago realized an “augmentation” strategy was needed, says Coller CTO, Howard Lask.

“We are around 150 people and a niche player within private equity.  When we set out to identify a systems solution for our operational areas we were unable to find off-the-shelf software to do what we needed. At that time, large software providers created systems mainly for primary buyout and venture funds in private equity. A lot of funds-of-funds and secondaries firms used industry-standard systems via workarounds, and lived with the inefficiencies caused from doing that,” he says.

“We took a different approach and built our own. However, with an internal IT team, certain issues arise: cost to recruit and train an IT development team in the UK; key-person dependency risk; and the ability to scale up quickly when new projects or additional requirements are generated by the business. So, using a very considered selection process, we set out to look for a partner to help us overcome these challenges.”

The answer was custom software provider DataArt. The strategy, the developer’s managing director Alexei Miller says, was deliberate: “Crawl, walk, run.”

Ben Shilliam, Coller’s program manager who oversees the partnership, says the staggered approach began with minor Microsoft Sharepoint support and updates, which would subject DataArt to a diverse set of the firm’s users. After proving itself there, DataArt worked on an initiative to replace Coller’s Microsoft Biztalk implementation with a customized data feed delivery system.

“Now we’re onto more bespoke projects and chunkier enhancements to existing applications,” says Shilliam. “They’ve just finished a large update to the system used to support our analysis and execution activities. We’re also using DataArt to mitigate key-person dependency risk in our main in-house application, which is a back-office investment monitoring and tax reporting solution.”

Coller’s relationship with DataArt promises operational savings as business volume ramps up, but Lask says the partnership is also about flexibility. “There isn’t a direct relationship between the deals we do and demands of technology, but an indirect relationship does exist,” he says. “Sometimes we’ll do a deal that’s a bit unique or out of the ordinary, something Coller is well-known for, and that can then generate a requirement where the existing functionality falls short in some way of delivering what’s needed. This creates the situation where we have to respond rapidly with system changes.”