Adapting SimCorp One for Private Markets: A Practical Assessment

I have had several conversations recently with clients running solid SimCorp implementations, clean data flows, reliable reporting, effective reconciliation processes. Everything working well for their equity and fixed income portfolios. Then their CIO announces an acquisition of a private equity stake in a mid-market infrastructure fund, and suddenly there is that familiar moment of uncertainty around the table.

The reality is that many of us built our current SimCorp environments for portfolios that looked quite different from what we're managing today.

The Shift Toward Private Markets

Private market assets are projected to reach around $65 trillion by 2032, substantially outpacing public market growth. But projections remain abstract until they affect your monthly operations.

What I am observing is less predictable than the forecasts suggest. It is not a smooth transition. Often, firms move from theoretical discussions about alternatives in one quarter to having closed three co-investments the next, with the Operations teams suddenly facing questions about waterfall calculations in SimCorp.

The drivers are clear. LPs are seeking diversification beyond public markets. While fixed income yields have normalized, the search for alpha continues. Mid-sized managers are also looking at how larger institutions have successfully deployed alternatives and feeling the pressure to develop similar capabilities.

Where Traditional Configurations Show Strain

Attempting to accommodate private market investments within any existing system landscape and without end-to-end integrated alternatives coverage is technically possible; most platforms are flexible. However, the practical challenges become apparent quickly.

Private Fund Managers or GPs often maintain separate spreadsheets because capital call timing doesn't flow naturally through the system. Operations teams manually enter investor statements due to data integration gaps. Operations teams struggle to reconcile quarterly valuations against daily NAV calculations. The result is excessive time spent in Excel rather than analyzing investment performance.

The issue is, when private market workflows are layered onto a system customization designed primarily for liquid securities, the result tends to be technically functional but operationally frustrating. This can occur, when liquid instrument functionality is bent towards representing some aspects of the new illiquid classes instead of going for a proper end-to-end business coverage with dedicated functionality, such as the SimCorp Alternatives offering.

There's another dimension that doesn't always receive sufficient attention when considering giving this journey the necessary attention: the cost of cash sitting idle awaiting capital calls. Portfolio managers typically maintain cash reserves for these calls, but any uninvested cash creates drag on total portfolio performance. Where managers have better visibility into their obligations, commitments, timing and capital requirements, they can explore hedging capital calls with options or other liquid instruments that can be liquidated as needed. This allows cash to work harder and potentially improve returns. While this approach has limitations in bear markets, it represents a valuable tool when operations and systems provide the necessary transparency.

The Integration Consideration

When SimCorp repositioned their Alternatives offering with the Domos acquisition in September (see our article discussing this here), it represented a meaningful development - an acknowledgment that private markets require platform-level thinking rather than just additional modules.

The acquisition also raises an important strategic question: is full integration preferable, or is a best-of-breed approach with strong connectivity more practical?

I have historically favored integration - one platform, unified data, clean lineage. This makes sense for relatively homogeneous asset classes. However, private markets present different challenges. Private equity workflows differ substantially from real estate, which in turn differs from infrastructure debt. Attempting to process all of these through identical engines can create unnecessary constraints.

The emerging picture suggests a future that resembles a well-coordinated ecosystem rather than a monolithic platform. The core SimCorp environment continues to handle what it manages well - liquid and illiquid securities, complex derivatives, multi-currency accounting. Specialized tools address private markets workflows with clean integration at the data and reporting layers.

The Domos acquisition is notable because it suggests SimCorp recognizes this dynamic. They are not attempting to rebuild SimCorp from scratch to handle everything centrally. Instead, they are expanding the ecosystem with tools purpose-built for GP and LP workflows while ensuring proper connectivity to the core platform. It is an approach worth watching.

Implications for Planning

For those running SimCorp today and beginning to face private markets requirements, several considerations warrant attention:

First, be realistic about timing. If your firm has serious alternatives ambitions, this isn't something to defer indefinitely. Operational complexity increases rapidly. One private equity fund can be managed with workarounds. Five funds across three strategies with varying reporting schedules will expose the limitations of current configurations.

Second, reassess your data architecture. Can you accommodate quarterly valuations alongside daily pricing? Is there a clean approach to tracking capital commitments versus deployed capital? How will you consolidate performance reporting when half your portfolio updates in real time and half updates quarterly?

Third, and this often receives insufficient attention, understand what the front office actually needs. I have observed implementations optimized for operational efficiency that create poor Portfolio Manager experiences. If Portfolio Managers can't readily view their total exposure across public and private positions, they will develop their own tools, and you will lose control of the data.

The Cost of Delay

There was an understandable inclination to wait. Let the SimCorp Alternatives offering mature. See what competing vendors develop. Wait for greater clarity on your firm's private markets strategy. The caution is reasonable. No one wants to champion a major platform shift that proves premature.

However, waiting too long might miss the window of opportunity. Firms that addressed this earlier are already realizing efficiencies that will take years for others to capture. They are not spending hours monthly on reconciliation adjustments. Their compliance reporting functions properly. Their PMs have visibility across their entire portfolio. The most recent acquisition by SimCorp completes their offer scope around Alternatives further and makes a move compelling, even for the hesitant readers. There might just be nothing left to really wait for anymore.

Perhaps most significantly, those companies that moved  already into a proper end-to-end coverage are positioned to evaluate private markets opportunities without operational friction slowing decision-making. When an attractive co-investment appears, they can model, evaluate, and execute without first determining how to process it operationally.

Looking Ahead

Expanding a SimCorp environment to properly accommodate alternatives is substantial work. It affects data management, reporting, compliance, risk, and front office workflows. It requires real resources and comes with genuine implementation challenges.

The alternative, however, is managing an increasingly diverse portfolio with technology that wasn't designed for it. That is likely a more difficult conversation to have with your CFO down the line.

The positive development is that the end-to-end tooling is beginning to match where the market has been heading and to create a comprehensive opportunity now to consider your implementation options. The latest development in SimCorp Alternatives, regardless of whether it is the right fit for your specific situation, indicates that major platform providers are treating this seriously and strategically.

The question is whether your firm is ready to do the same.

Ready to Future Proof Your SimCorp Environment?

If your firm is navigating the shift toward private markets or evaluating how to integrate alternatives into your existing SimCorp setup, let us talk. Mark Henoch has spent over two decades helping investment managers across Europe successfully expand their platforms to handle increasingly diverse portfolios.

Whether you are facing your first private equity investment or managing operational friction across multiple alternative strategies, Mark can help you assess your options and chart a practical path forward.

Contact Mark Henoch