Servicer' Spot - Alpha Cooperative: outsourcing is becoming a more commonplace
The Alpha Cooperative LLC (TAC)'s role is to provide institutional infrastructure for managers and investors in the alternative investment industry. An institutional infrastructure here consists of personnel and technology in accounting, operations, compliance, risk and investor relations.
"We provide operational infrastructure to primarily emerging hedge fund managers," Julie Corcoran, TAC's Director of Business Development, told New Managers. "There is a real attraction to emerging managers but investors just can't get comfortable with their operations. So it's bridging the gap between what the managers can reasonably provide and what the investors are expecting."
The technology offerings are done through third parties, but TAC otherwise does the heavy lifting in-house, she adds.
TAC, which fee is asset-based, is currently working with a few startup managers right now, Corcoran says: "Two of our clients are in the startup phases and are going to be launching in the next month or two. We have done everything from reviewing CRM systems, vetting out their prime brokers, helping get their offering documents in order working with their attorney, and serving as liaison between the service providers negotiating contracts and pricing."
The New York-based boutique is new itself, having launched in 2011. The nine-person team comes from the hedge fund space and worked with small managers in various roles, Corcoran explains. The two founders both successfully launched their own funds and experienced the typical initial back-office requirements. But when returns were flat and assets decreased, they struggled "to support that fixed cost operational structure on a variable income."
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