Streamlining Alts’ Operations With Integrated Transfer Agent, Custody Services

By Kevin Brennan, Executive Vice President, Business Development and Strategic Client Management, Computershare; and Michael Oliver, Senior Vice President, U.S. Corporate Trust, Computershare

Complexity is the norm in the fast-evolving alternative investments market. Unlike traditional investments such as stocks and bonds, alts involve a diverse landscape of private equity, business development companies, non-listed real estate investment trusts, and more.

Alts investments also often involve a complex web of multiple stakeholders: fund sponsors, financial advisers, investors, selling firms and custodians, each of whom play a critical role in the investment cycle.

As the market develops, so does the demand for operational efficiency.

Fund sponsors, in particular, face mounting pressure to deliver high-quality operations while remaining agile and cost-effective. Integrated servicing modules offer a compelling solution.

“As alts investments mature, they often require more support as they evolve,” said Ann Bowering, chief executive officer of Computershare’s issuer services in North America. “Computershare’s services can help companies navigate the next chapter of their journey, whether it requires becoming a public listing, a comprehensive investor engagement strategy, or global entity management solutions.”

Following the acquisition of Wells Fargo’s U.S. corporate trust business in 2021, Computershare expanded its capabilities, which include custody services.

“Corporate trust services are often involved with non-standard structures such as alternative investments,” said Michael Watchke, head of Computershare corporate trust for the United States. “Beyond the custodian role, we can also act as an escrow or collateral agent as well as other key corporate trust roles.”

Some fund sponsors have recognized the strategic value of consolidating transfer agent and custody services under one supplier.

Transfer agents play a critical administrative role in the alts ecosystem. They manage shareholder records, handle commissions (and ‘trailing commissions’), and deliver essential data to stakeholders. Meanwhile, custodians safeguard assets and handle transaction settlements, asset servicing, reporting, and reconciliation. The appointment of a qualified custodian may also satisfy certain regulatory compliance needs.

Historically, transfer agent and custody services have been handled by separate providers, resulting in inefficiencies such as duplication of effort and increased legal and compliance operating costs.

An integrated service model may help fund sponsors to reduce cost inefficiencies, improve data consistency, and accelerate the time to market for new fund offerings.

Case Study: Powering a $1.1 Billion Capital Raise for a Non-Listed BDC

A private debt sponsor aimed to raise $1.1 billion to enable a non-listed BDC to invest in second lien loans, mezzanine debt, equity and other private capital instruments through U.S. middle-market companies with annual earnings between $15 million and $100 million.

The sponsor required a servicing partner capable of managing investor subscriptions, loan custody, interest, dividend payments, and net asset value reporting.

Computershare supported the streamlining of operations by providing integrated transfer agent and custody services to the BDC. As the custodian for the loans made by the BDC, Computershare administered the leverage facility supplied by a third-party bank and delivered daily reporting to both the sponsor and fund accountant.

As a result, investors received accurate NAV calculations promptly, which ensured transparency across the investment lifecycle.

Beyond Convenience: Real Operational Synergies

Integration isn’t just about simplifying workflows. It’s also about unlocking tangible benefits that improve fund economics and investor satisfaction.

Potential key benefits of an integrated model include the following.

• Single contract structure: Previously, law firms and their clients had to review separate agreements for registry and custody services. Under an integrated services structure, fund sponsors can consider a consolidated agreement, likely leading to cost reduction, less legal complexity, and an accelerated onboarding timeframe.
• Scalability: Standardized workflows and centralized service allow fund sponsors to launch new products more quickly and manage complex investment structures more efficiently.
• Streamlined communications: Sponsors benefit from dedicated contacts overseeing custody and investor services, eliminating the need to manage multiple vendors.
• Improved synergies: An integrated service team ensures a reliable transition between the custody and transfer agent teams, significantly decreasing the likelihood of misaligned investor records, transaction processing, and compliance reporting.
• Enhanced investor experience: Web-based tools for subscriptions, redemptions, and distributions are seamlessly connected for key stakeholders, offering investors a more transparent and responsive user interface.

For fund sponsors navigating the complexities of launching and managing alternative investment vehicles, the message is clear: integration is not just a trend, it’s a strategic advantage.

Kevin Brennan is the executive vice president of business development and strategic client management for Computershare’s issuer services business. He brings extensive experience across sectors within the U.S. equities market. Prior to this role, Brennan served as the president of Computershare’s U.S. plans business and managing director at BNY Mellon.

Michael Oliver is a senior vice president and sales executive in the specialized asset servicing division of Computershare Corporate Trust. He is responsible for driving corporate trust opportunities in the leverage loan market for collateralized loan obligations, leverage loan and credit facilities, loan custody/separately managed accounts, BDCs, and loan agency.

The views and opinions expressed in the preceding article are those of the author and do not necessarily reflect the views of AltsWire.

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