SimCorp, a leading provider of investment management solutions and services to the global financial services industry, today announced the introduction of private debt into the latest version of its investment platform, SimCorp Dimension®. The new private debt module is part of SimCorp’s dedicated alternative investments focus and was developed in partnership with clients, including, PKA, Denmark’s fourth largest pension fund with over EUR 33 billion in AUM. The latest addition is a direct response to the growing interest in private debt by institutional investors globally, seeking risk-adjusted yields across asset classes, in a continually low-interest rate environment.
Private Debt is now considered an established asset class in many regions. Post the 2008 credit crisis, with banks consolidating their balance sheets, institutional investors have poured into the opening left by them. In recent years, its returns and popularity have even risen over and above traditional bonds, as global political uncertainty has intensified. In a 2017 InvestOps report¹ commissioned by SimCorp, buy-side firms in North America named private debt, with its ‘low correlation to other asset classes’, as the ‘number one source of new liquidity’ (36%), over securities-lending and derivatives.
The new private debt module supports buy-side operations with a vast range of loans including syndicated, term, direct, bilateral, bank and commercial loans. Combined with SimCorp’s award winning Investment Book of Record (IBOR), the module can now be incorporated across the investment value chain, from front to back office. The introduction of this asset class forms part of SimCorp’s strategic focus to create an integrated solution that offers a wide range of financial instruments across traditional and alternative asset classes, as institutional investors continue to diversify.
Investment managers will be able to optimize and manage intricate private debt transactions in a highly-automated process, removing the previous difficulties of manual processing, caused by private debt’s unique features, such as parallel interest terms, special lifecycle events and valuation. Further, the new module eliminates some of the trade flow complexities, including delayed settlements and special fees calculations.
Sofie Klarskov Simonsen, PKA, commented: “With low interest rates and a rapidly growing number of financial instruments available, we’ve had to think out of the box to ensure we are able to pay out future pensions to our members. Private debt is now quite a large portfolio, alongside real estate. Its risk/return ratio is particularly attractive to pension funds like us, and compatible with our long-term strategies.”
“The new Private Debt module supported by SimCorp’s Investment Book of Record (IBOR), means we have a front-to-back view of our private debt transactions. It is a new module with immense potential, which when further enhanced will play a significant role in our performance and reduce our operational risk significantly. We are very pleased to have been involved in this process and to have helped shape the functionality and requirements.”
“Igor Gramatikovski, Securities Product Manager, SimCorp, commented: “By partnering with PKA and using their vast experience with private debt investments, together with feedback from our wider client base, we’ve been able to address several key challenges to this unique type of investment. We are committed to ensuring that our investment platform delivers a strong offering across alternative asset classes, in line with changing market requirements and client demands.”
SimCorp will continue to invest in building this module, as it maintains its client engagement. Plans are already afoot to include US and France specific private debt accounting (amortized cost to P&L per tax lot) within the next iterations of SimCorp Dimension®, which is released twice a year.
SimCorp provides integrated, best-in-class investment management solutions to the world’s leading asset managers, fund managers, asset servicers, pension and insurance funds, wealth managers and sovereign wealth funds. Whether deployed on premise or as an ASP solution, its core system, SimCorp Dimension, supports the entire investment value chain and range of instruments, all based on a market-leading IBOR. SimCorp invests more than 20% of its annual revenue in R&D, helping clients develop their business and stay ahead of ever-changing industry demands. Listed on NASDAQ Copenhagen, SimCorp is a global company, regionally covering all of Europe, North America, and Asia Pacific.
¹ InvestOps ‘Optimizing Front to Back Investment Operations’, 2017