Permian | Fund Manager – Strengthen the CFO Function through outsourcing
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Fund Manager – Strengthen the CFO Function through outsourcing

A challenging market as well as stricter regulation of alternative investment funds and investment companies demand high quality-, capacity- and expertise in the CFO function.

In addition to a solid track record and an unblemished reputation, fund managers must provide high quality investor communication and reporting. Risk management and compliance must be an integrated part of the operation.

Permian is experiencing a growing demand from fund managers seeking to outsource their need for highly skilled and specialised CFO competence, experienced controller function, fund accounting services and quality back-office assistance.

High demands on the CFO and finance function

In the wake of the financial crisis, regulatory authorities have been active and produced new laws, such as AIFMD, EuVECA and ELTIF, to comply with. As important as tit is to have them, the still pretty new directives set considerably higher demands on managers’ internal controls than ever before. Managers must document stronger corporate governance, money laundering controls and investor classification procedures. Focus on investor protection has led to stricter regulation of market access, risk management and compliance.

Where high capital inflow, strong competition and regulatory provisions meet, the requirement for knowledge and experience in operation is raised not only for the fund managers but for the CFO, fund administration and finance departments.

Outsourcing the CFO function?

The financial management function in the company, headed by the CFO, requires broad knowledge and experience. It is demanding, especially that the CFO needs to handle the challenges of operating a compliant and effective organisation under stricter market regulations. Some of the important tasks are:

  • Follow up and understand the implications of regulatory requirements
  • Strengthen the compliance and risk management function
  • Establish routines that reduce operational and tax risks
  • Funding
  • Cooperation with legal advisors
  • Meeting investor expectations of reporting and communication
  • Streamlining of operations, including the IT function
  • Fund structure establishment
  • Secure that the organisation meets compliance and regulatory requirements

The objective for the financial management function it to contribute to a high level of value development by focusing on strategic aspects of the business as well as on operational side where a competent controller and accounting function plays an important role.

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There are a number of areas where it is important for the CFO to deliver high quality services:

  • Periodic- and annual accounts
  • Tax reporting, hereunder investor tax support
  • Value reporting to investors
  • Fund and manager reporting to financial authorities
  • AIFM’s capital requirements
  • Preparing board presentations and documentation
  • Cash management including currency hedging
  • Keeping track of fund/fund manager obligations

 

Since the need for capacity and nature of competence from the finance function changes significantly over time, it is understandable that owners of investment companies are increasingly seeking assistance from companies that has made back office operation into its front office core focus area.

If you have questions or welcome advice on how to develop the finance function, please contact the article’s authors.

Marianne Normann, CEO Permian Business Partners AS, mn@permian.no

Ben Guren, CEO Permian AS, ben.guren@permian.no

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