Agency and Trustee Services

Kroll Managing Director Adam Raffa discusses the distinct advantages that come from engaging a third-party agent to administer private credit loans, syndicated debt, private placements, restructurings, escrow for M&A, acquisitions, bespoke continuation fund banking and other capital market solutions.

Banks continue to play a critical role in many capital market transactions, particularly when balance sheet products, lending relationships, or regulated trustee functions are required. However, as transactions grow more complex and require bespoke solutions or faster execution, private equity firms are increasingly turning to independent third-party administrators to supplement or, in some cases, even replace traditional bank-driven models.

 

Q. What Are the Main Advantages and Benefits a Third-party Provider Can Deliver?

This is not an argument against banks as institutions. Rather, it reflects a growing recognition that certain transactions are better managed independently, without the limitations of traditional balance sheet, legacy systems, or internal credit processes.

With the rapid changes and fast pace of today’s market environment, innovation and a more forward-thinking perspective in transaction banking coupled with adaptability to consumer needs have become increasingly crucial. As a result, demand for third-party agents continues to be on the rise.

Our clients increasingly recognize the advantages of working with a third-party services expert like Kroll over traditional banks. Recent feedback highlights our heightened responsiveness and effectiveness, especially in complex calculation agent roles for PIK loans or delayed draw facilities.

I believe third-party financial agents and service providers are at the beginning of another major growth cycle when it comes to transaction related administration agent work. The abundance of “refreshing” feedback has been largely driven by frustration with the traditional banking approach to capital market transactions as well as the consumer’s demand for APIs, real-time information, and user-driven functionality.

For many years, banks were the sole providers of Banking as a Service (BaaS). However, in recent years, third-party non-bank financial services firms have emerged not only as alternatives for managing trade administration but also as the preferred choice for private equity firms, family offices, and transaction intermediaries.

 

Q. How Are Private Equity Firms Attempting to Overcome the Challenges Associated With Working With Banks?

While many private equity firms manage certain agency tasks internally, Kroll offers flexible solutions and delivers an innovative, customized consulting approach tailored to the transaction needs of our private equity clients.

Many firms, large and small in terms of Assets Under Management (AUM), successfully manage their distributions to investors and limited partners (LPs) by working with internal functional partners. Clients turn to Kroll for our global reach and advanced technological solutions, which helps streamline distribution processes with greater efficiency, precision, and transparency. In a complex capital markets ecosystem with investors who demand transparency and ease of service, Kroll efficiently steps in to facilitate and execute small administration needs and, in many cases, the full agency requirements.

When a firm is fully committed to the administration component, Kroll can act as “sub agent” or “sub paying agent” on distributions to syndicate members and/or investors quarterly, with minimal effort required from the client. This type of work referred to as “sub agent work” and we have seen a massive increase in this desired approach from some of our best lenders and direct lending clients since the private credit market took off. We ask our clients to tell us what keeps them up at night when it comes to administering their deal and based on the response, we work with them to provide customized solutions. We have a steady flow of inbound bi-lateral loans and large syndication deals through direct mandate. Kroll’s Agency and Trustee Services team combines deep expertise with unrivalled efficiency, making us a strong partner for private equity firms seeking to successfully close deals in today’s market.

With more dry powder than ever waiting for deployment across the PE arena, general partners are focused on distributed return and liquidity rails to their limited partners. Kroll has seen ample frustration from PE clients around cash management banks and corporate trust desks with inefficient onboarding processes and slow account opening turnaround times. Often the delays and inefficient processes lead to missed trades, wrong distributions at closing requiring recall of payment, or a later than ideal entry to their investment.

What makes Kroll an industry-leading third-party administrator is our ability to deliver exceptionally fast onboarding and bespoke solutions that meet our clients’ transaction governance and distribution requirements. It’s an extremely exciting time to see the convergence of traditional operating models and newer, more flexible approaches when it comes to their banking and capital market transaction needs.

 

Q. How Does Partnering With a Third-party Agent Save Money?

A third-party agent such as Kroll brings cost efficiency across the board. There are no transaction passthrough costs, competitive annual fees, and solution-oriented collaboration. Saving time means saving money. Kroll’s efficient setup means we do not instigate the potential of our clients missing a trade, clearing a massive obstacle from a profit and loss perspective.

For private equity firms, the choice between a bank, a third-party administrator, or a hybrid model is increasingly driven by transaction-specific needs rather than a one-size-fits-all approach.

 

Partner With Kroll

Kroll delivers efficient, market-leading Agency and Trustee Services for global private equity firms. We specialize in administering private credit loans, syndicated debt, private placements, restructurings, escrow for M&A, acquisitions, bespoke continuation fund banking and other capital market solutions. We are committed to providing each client with personalized service and advanced technology no matter the size or complexity of the transaction.

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