Private Market

Removing barriers for distributing and accessing private markets strategies for all investors 

As a leading private market platform in Europe and the largest asset holder in Germany, Clearstream is committed to continuously supporting and processing the increasing volume of private market funds for its institutional clients.

The role of private market products in an investor portfolio is becoming ever more important, providing access to innovative companies in their early stages of growth while offering a multi-generational return potential and portfolio diversifying power. However, this asset class by its nature implies illiquidity, complexity and higher investment barriers compared to traditional UCITS products for its investors and intermediaries.

Growing investments in alternative instruments have increased the demand for consolidated services covering all investment fund types on a single platform. With its state-of-the-art alternative fund processing platform Vestima, Clearstream has successfully established leading efficiency in the market, offering investors a superior value proposition and servicing >€150bn of alternative assets.

As the industry trend for private market products continues to grow, Clearstream is ideally positioned to build-out its leading Vestima franchise further and maximise value for its customers as a one-stop-shop across all fund types, providing distribution, order routing, custody and data services.

With ELTIFs (European Long-Term Investment Fund) as a vehicle, we also see an increase in European retail private investors accessing private equity, infrastructure, private debt and alternative investments at a low investment requirement, resulting in substantial growth of ELTIF volumes on our Vestima platforms (Vestima volumes increased tenfold between 2021-23).

Clearstream is actively and continuously enhancing  the processing efficiency via Vestima for private market products like ELTIF for its institutional clients.

Increased compliance and reporting costs 

  • ELTIFS and LTAFs: Both  European and UK regulators aim to increase the uptake of ELTIFs and LTAFs, which are designed to offer exposure to alternative long-term investments for retail investors.
  • AIFMD II: The Alternative Investment Fund Managers Directive (AIFMD) II will further strengthen requirements, adding cost pressure on asset managers.

Market needs

Investors are looking for cost-efficient access to private market investment opportunities, which complements their experience with more traditional investment funds. They also want access via their existing channels.

Distributors are looking for solutions to navigate through the private market investment offering so they can integrate private market investment strategies into their customer portfolios.

Asset Managers are looking for support to find the best way to access and enlarge their distribution network. They intend to design ELTIFs with more competitive pricing in order to attract the retail mass, since ELTIFs today are still relatively expensive compared to UCITS.

Intermediaries, Fund administrators and TAs are looking for streamlined operations & reporting.

Enhancing efficiency in private market

With Clearstream, you can leverage a highly efficient one-stop-shop for fund service, covering distribution, order execution & processing, asset servicing and best-in-class data management solutions – for all fund classes and including private market products across the service chain.

Clearstream's goal is to continuously enhance  private market efficiency and lower the barriers for investments into alternative funds:

  • Increase operational efficiency.  We have developed operational efficiencies with fund administrators and private market platforms to enable investment in the most competitive way.
  • Better fund onboarding transparencyWe will disclose the Vestima key attributes to asset managers before the creation of their products, so that asset managers will be able to onboard their product on our Vestima platform in the most efficient way.
    • Investors benefit from operational efficiencies implemented by Clearstream
    • Investors can access all opportunities under our one-stop-shop
    • Asset Managers can sell their funds through the Clearstream distribution network in the most effective way.

Bring your ELTIF’s and other Private Market products to the market as smoothly and as quickly as possible

With increasing market demand for onboarding ELTIF structure in addition to other private market products, Clearstream’s clear guidelines support asset managers to set up their funds in the most efficient way and make them available to Clearstream’s clients.

A pre-requisite is that the fund meets Clearstream’s regulatory and compliance standards and is domiciled in a jurisdiction that is supported by our market coverage.

Below are some key attributes that help define the best operational processing platform:

Straight-through processing 

  • Simplified account opening – Master application
  • OHA is CFF participant
  • Standardised trading rules
  • Predominant use of STP channel - Paperless transaction flow
  • Capital commitment with 100% upfront drawdown

Specialised operational processing

  • Limited or no STP connectivity
  • Original documents are required for each trade
  • Lock up period and series issuance
  • Equalisation related to performance fee
  • Upfront commitment and multiple subsequent drawdowns
  • Account declarations such as FINRA rule that require frequent recertification over the lifecycle of the fund

** Please note that this is NOT an exhaustive list, and each fund is reviewed on its own merits. The assigned platform will be officially confirmed only after full assessment is completed by our in-house experts.

For more information on how Clearstream helps our clients overcome the challenges of accessing the private markets and facilitating their entry into this space, watch this video with the Head of Strategy, Lisa Koenig. 

Contact us today! Your relationship managers are here to support your requests.