What Are the Odds? SS&C Speakers Discuss the Election’s Impact on Financial Markets
Nearing the completion of a very tight presidential race, speakers at SS&C’s Deliver conference laid out the two candidates’ impact on finance, while also sharing views on private markets trends, LPs’ alternative investment plans and more
After several weeks of early voting, the presidential race is finally nearing the finish line this week on election day. Speakers at fintech company SS&C’s Deliver conference, held in New Orleans Oct. 6-8, discussed the state of the race, potential outcomes and how those might impact financial markets.
“What we have now is a crazily tied race,” said Michael Townsend, managing director in legislative and regulatory affairs at Charles Schwab. “After a burst of enthusiasm at first for Kamala Harris, it leveled off,” he said speaking on a general session on Oct. 7. Both candidates are showing about 80% enthusiasm from their base, he noted, with Democrats being brought back from a slump in September, when Republicans’ enthusiasm for Donald Trump was around 70% and Democrats’ for Joe Biden was around 33%. “We’re supposed to have the same enthusiasm from their base, so Harris put it back where it should have been.”
He noted, though, that just seven swing states will ultimately determine the outcome of the election and the candidates are just one or two percentage points away from each other in most polls, if not less. He pointed out that in the last election, Michigan was decided by just 11,000 votes.
Event Recap
WHAT: SS&C Deliver 2024 Conference
WHERE: Hyatt Regency, New Orleans
WHEN: Oct. 6 -8, 2024
THE TAKEAWAY: Alternative investment firms and LPs are diversifying their portfolios and branching out into new strategies, which in turn requires sophisticated software, analytics and automation tools.
Looking at what’s best for financial markets, Townsend said that it’s actually the current set-up: a Democrat in the White House and a split Congress, though that’s a rare scenario. Ultimately, he said the outcome will depend on how many people actually go to the polls. “I don’t think we have undecided voters, I think it’s about motivating unenthusiastic voters to go out and vote.” And the battle for Congress matters more to the markets, in a way.
David Rubenstein, co-founder and co-chairman at The Carlyle Group, agreed that the race was tight and the country is split along ideological lines, but there is still nowhere else he would rather be. “The entrepreneurial spirit isn’t quite the same in Europe. Most of us can’t get through the day without a technology invented in the U.S., like Google, Apple, Microsoft, Amazon or Netflix,” he said speaking in a keynote address on the morning of Oct. 7.
Panelists and SS&C executives said that, aside from high interest rates and geopolitical headwinds, the upcoming election could also be slowing down M&A. Dan Pallone, vice president at Mortgage REIT and Loan Solutions at SS&C, said that some deals were pushed out to the fourth quarter and beyond because of the election. Regardless of who wins and whether it’ll be good for the markets, “the uncertainty will be gone,” he said.
Beyond the election, multiple tracks at the conference, including Private Markets, Asset Management, Hedge Funds and Insurance, explored intelligent automation tools for private equity and credit, LPs growing interest in alternative investments and insurance companies’ diversification into loans and real estate.
AI Applications Across Functions
SS&C and several of its businesses like Blue Prism, Intralinks and GlobeOp offer a suite of software services and AI tools to fund managers. As different fund models grow and converge, some of these tools help alternative investment firms and their LPs automate their processes more efficiently, SS&C executives explained.
When it comes to private credit, some of the firm’s intelligent automation services can perform repetitive tasks like reading documents, updating information on thousands of loans and summarizing loan agreements collected at individual properties, explained Pallone in an interview with Middle Market Growth.
In fundraising, the engine can read subscription documents and roll-up documentation into a fund-of-fund model, for example, using optimal character recognition (OCR) and robotic process automation (RPA) technologies and large language models (LLMs). Like Chat GPT, it allows the tools to summarize documents for clients, train the models for memory and specific requests.
SS&C executives caution that these processes still need human oversight. They don’t think of it as replacements for human jobs rather than something that “allows humans to be more effective and efficient” in their jobs, says Michael Marchuk, vice president in strategic advisory at Blue Prism. “It’s a digital labor force that can be applied anywhere, across different functions like accounting, HR and operations. People are starting to warm up to it and we are starting to see a change in the acceptance rate,” he added.
The Deal Stage
Executives at SS&C Intralinks, which hosts data rooms for companies going through M&A processes, said there were about 3,000 deals sitting on the Intralinks platform “staged” for auction. Intralinks has been offering new services to clients where they can use the platform to start preparing companies for exit months or years ahead of a formal M&A process.
“We’re moving from a transactional experience to a solution platform that can manage the deal pipeline from preparation to auction to close,” said Ken Bisconti, co-head of Intralinks, in an interview with Middle Market Growth.
The new platform, called DealCentre, was launched in October. It uses AI tools to help companies and bankers gather all the documents, performance information and details from different departments that will be needed once the company goes into an auction process.
Taking LPs’ Temperature
Noreen Crowe, vice president for product management at Intralinks, presented the findings of Intralinks’ annual LP survey at a panel on the Private Markets track. Among 171 investors that were polled globally, 62% said they planned to increase their allocations to alternative investments, and 36% said they planned to increase it by 10% or more.
The survey participants also said they expected private equity and private debt to deliver the best risk-adjusted returns at 39% and 23%, respectively (venture capital, infrastructure, hedge funds and real estate were the runners up). Investors said they would favor mid-size fund managers ($100 million to $500 million) the most in the next year (at 34%). They cited co-investments and secondaries as some of the most interesting trends right now in private equity investment. Seventy-eight percent of LPs said they expected deal activity to pick up in the next 12-15 months.
While investors are still looking to private equity to deliver returns, many have been frustrated with a lack of liquidity. Interest in continuation funds, for example, is on the decline—at 11% this year from 20% last year, Crowe said. The survey also showed that LPs are anxious around geopolitical uncertainty and M&A valuation trends.
The event hosted over 1,000 attendees among SS&C executives and financial industry clients. It opened with a fireside chat between SS&C CEO Bill Stone and Carlyle’s Rubenstein. In addition to panels, the conference featured a variety of labs where clients could test out AI tools. The closing night offsite dinner at Generation Hall offered a variety of cajun and creole dishes, as well as performances by a several musicians, including Sugar Ray’s Mark McGrath. The same event will take place in Phoenix, AZ, October 26 to 28 next year.
Anastasia Donde is Middle Market Growth’s senior editor.
Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.
