Apex Group’s Loan Administration platform was recently awarded “Best debt/ loan administrator” at the Alt Credit Fund Intelligence European Service Awards 2020, recognition Apex’s breadth of integrated services for global Credit Managers and ability to deliver for our clients even during these unprecedented times.
Eddie Kelly, Head of Loan Services at Apex Group reflects on some of the challenges which managers have faced in 2020, and how Apex’s single source solution has enabled them to focus on their core competencies during this time.
The loan asset class has become widespread in today’s fixed income portfolios, with managers flocking to the strategy as a way to increase returns in a low interest environment. Portfolios can contain a mixed bag of secondary market syndications and a degree of opportunistic direct lending facilities that spread risk and returns to ensure a degree of consistency for their investors even in these uncertain times.
The ever-present and increasing global requirement for flexible financing brings significant opportunity for managers to deploy capital quickly to companies that need it, while being able to offer attractive terms that can adapt to individual circumstances. As a result, direct lending by non-banks is here to stay.
Deploying a fund’s capital can be challenging at the best of times – and we can all agree that 2020 has not been the best of times. The operational challenges working remotely, ongoing tracking and maintenance means that deploying capital efficiently has proved difficult and placed pressure on internal operating models. We have seen at the new circumstances under Covid-19 have highlighted many gaps and operational issues for managers who struggled to keep their operations running while working from home. In some cases, this results in a level of disconnect within their businesses and getting access to the information required for decision-making and risk oversight is slow and cumbersome. Whether a loan relates to property transactions, business expansion, development or working capital, it is important that managers are not distracted and are still able to dedicate their time and resources to concentrate on the core competencies of due diligence, risk assessment and identifying opportunities.
The key demand of managers today is having a comprehensive view of their current portfolio and all its attributes on demand. For example, if a manager wanted to view their borrower base to identify who is not able to operate under restrictions and therefore may miss their upcoming payments, they must rely on a consolidation of multiple data points from potentially several sources, which takes time and resources. By the time a report is produced, the drivers have shifted again. Such a tool is key to understanding where additional oversight is required not to mention how you adapt in managing future cashflows.
Portfolios can contain a mix of asset types from various issuers with multiple key attributes which themselves are public or private. Consolidating this information to a holistic view using a single source is no easy task. In the past, managers have invested in and implemented various solutions in an attempt to meet the needs of its business and finding that they are left short. The gap ultimately has been filled by a variety of systems and complex Excel spreadsheets with manual workarounds. Whilst this does the job to a point, it introduces another range or risk to an expanding platform. Many have learned the hard way, that this approach will only get you so far and provides little to no comfort from an audit perspective. Risks can vary from changing formulas to take into account updates to the loan’s makeup or data loss from a crashing operating systems. Not to mention the key person risk for whoever designed the workbook and forgot the share the new password!
Outsourcing the loan administration function is not a new concept but given the events of the last year is certainly one more managers are beginning to assess and see the benefits. Chief amongst these benefits are a combination of the provision of scalability and access to up to date information on their portfolio and the key characteristics of their borrowers for risk management and liquidity management, together with a more recent ask to combine Loan Administration with elements of Loan Agency, with a particular focus on Security Agent/ Collateral Agent roles and due consideration of documenting bilateral loans using LMA standards in contemplation of future syndication and the appointment of cold/ standby Facility Agents..
Apex Loan Administration
We have developed a market leading service that provides operational support to funds and vehicles that invest in a variety of debt products. Our leading technology is scalable to any business size and, when combined with our robust procedures and local market knowledge experts we can tailor a bespoke load administration solution to meet your funds needs during these uncertain times. Delivered with local support, our team of experts design solutions that give our clients instant access to their portfolio, providing peace of mind and the ability to have oversight and take decisive action to protect their investment.
Apex Loan Agency
We provide tailored services to bilateral, club and syndicated loans. Our local teams offer transaction support from a borrower, lender and debt fund perspective. We represent either a group of lenders on a single loan through our Loan Agency services, or lenders (including direct lenders) with portfolios of loans through our Loan Servicing proposition. We support the loan lifecycle across developed and emerging markets; both performing and non-performing, large and small syndicated transactions.
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