Data flows for broadly syndicated loans (BSLs) are deemed “inefficient”, with some private credit firms still relying on email, PDFs and faxes to manage fund data.
Cynthia Sachs, CEO of data firm Barsana, warned that private credit fund managers risk delays by maintaining outdated data systems and may not be able to keep up with growing demand from investors.
“Currently, data flows in the BSL market are inefficient,” Sachs said.
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“There’s a lot of email and fax correspondence, and scraping of those emails and faxes. There are various events happening with borrowers that ultimately need to be communicated to the lenders in the syndicate. Currently, this is done by email and fax, which creates a lot of delays and errors. A lot of information is missing because the process is somewhat antiquated.”
In the BSL market, the real work begins once a loan is issued. Each of these loans can involve thousands of lenders agreeing floating interest rates, which means the underlying BSL data is constantly changing and it’s essential that fund managers get the calculations right to ensure both borrowers and investors get the right interest rate.
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This type of data collection is relatively new in the private credit sector, and Sachs has seen many fund managers relying on emailed PDFs and e-faxes to share this information, which can create security risks and also increases the risk of human error in a highly scrutinized market.
Versana is a data management fintech specializing in the syndicated loan asset class. Sachs believes there are many commonalities between the BSL market and private credit, and is committed to bringing together both parts of the market to improve operational inefficiencies.
“Our platform is specifically focused on correcting operational inefficiencies in the syndicated loan asset class,” she says.
“Corporate lending has historically come from banks, and that’s what the term ‘broadly syndicated lending’ typically refers to, but corporate lending can also come from private credit funds. So we’re focused on the private credit space as well, in terms of corporate lending coming from private credit funds. So we’re focused on corporate lending, and we’re looking to improve our operational efficiencies, starting with data and ultimately technology.”
Versana has more than 4,000 properties registered on its platform with commitments of around $2.1 trillion (£1.63 trillion).
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“What we’re all ultimately trying to help is make the market more efficient, reduce the cost structure, create a better environment and get more capital into the asset class,” Sachs said.
“Versana is in its foundational stages right now, but we’re solving a very important core problem that everyone needs. And by solving this problem, the market will have better data and analytics, which will ultimately really help grow the asset class, because more data means more transparency.”
Currently, eight major banks are contributing data to the Versana platform, allowing the company to aggregate market data and distribute it digitally without manual intervention. In the future, Sachs hopes to use this data to create indexes and comparison products that help investors better understand the private credit sector.
But for now, the focus is on data aggregation: a recent Versana survey found that data and transparency are the top priorities for investors, even ahead of high returns, highlighting the importance of streamlining data flows and aggregating market data.
“The asset class is underinvested,” Sachs said.
“We’re really excited to be transforming this market. We want the market to come together.”
