Business Situation
- A leading US-based private equity firm sought to build a robust solution to analyze their fund performance, streamline reporting for enhanced accuracy, and provide real-time insights to investors.
- The client aimed to leverage artificial intelligence (AI) tools to aggregate fund data, calculate key return metrics, and automate reporting through intuitive Power BI dashboards, delivering valuable insights that enabled informed, data-driven investment decisions.
SGA Approach
- Data Aggregation and Synthesis: Aggregated and synthesized key portfolio- and fund-level metrics from fund reports by leveraging an AI-powered data extractor, including investment transactions (acquisition prices and stakes), cash flows, valuation metrics (current and historical), capital calls, distributions, and net asset values (NAVs).
- Cash Flow and Return Distribution Modeling: Analyzed cash flows at both the portfolio and fund levels, calculating internal rate of return (IRR), multiple on invested capital (MoIC), distributed to paid-in capital (DPI), and residual value to paid-in capital (RVPI), while accounting for realized/unrealized flows, recallable distributions, and the J-curve effect. Integrated AI-powered tools to automate and enhance the creation of these analyses.
- Return and Performance Metrics Calculation: Computed limited partner (LP) and general partner (GP) returns by factoring in management fees, carried interest, and performance fees, providing a precise view of financial outcomes for portfolio and fund levels in line with fund covenants.
- Portfolio Review and Reporting: Developed automated and interactive Power BI dashboards, facilitating easy access to performance data for individual portfolio companies and the overall fund, enabling efficient review.
Key Takeways
- Increased Transparency: Consolidating data into a unified report enhances transparency, giving investors real-time access to comprehensive fund performance insights.
- Better Data Usability: Tracking individual fund performance enables comparisons with other funds and market benchmarks, empowering investors to make well-informed decisions.
