First Sentier Investors Revolutionizes its Treasury and Risk Management

Introduction

When First Sentier Investors was acquired by Mitsubishi UFJ Financial Group (MUFG), it went from being part of one of the largest banks in Australia to a standalone global investment management business. The treasury program used when part of the bank system was very powerful and excelled at current mark-to-market valuations but did not have the functionality to perform more comprehensive, in-depth FX, risk and liquidity forecasting, and management analysis. The Australian Infrastructure Investments team of First Sentier Investors required a system more aligned to a corporate treasury desk with more robust analysis tools to monitor risk exposures. Better compliance and reporting functionality were also needed for First Sentier Investors to meet fiduciary obligations to its investors and regulators.

The Challenge

With a complex investment universe consisting of 18 individual investment portfolios spread across five hedge funds that feed into two master funds, First Sentier Investors’ infrastructure treasury team takes a multi-layered approach to managing the total risk and liquidity of the funds. The team must track the exposure across all FX hedges in the entire portfolio, then by each feeder fund, and finally at the individual asset level to ensure adequate liquidity will be available when investments mature.

Adding to the complexity is the fact that each fund in the portfolio has its own management fee structure that must be calculated, tracked and reported.

Capital gains and losses on individual assets in the portfolio must also be reported to investors for tax purposes. That is not to mention all the reporting that must be generated to meet compliance requirements.

On the flip side, the treasury team must also track the availability, usage and fees associated with the debt facilities available to the funds under management. Each of the lenders has a different participation level in the overall available facility, and every debt instrument has its own limit. With each drawdown, the instrument type must be tracked against the sub-limits as well as the overall limit to ensure the drawdown does not overdraw the overall facility limits.

The Solution

First Sentier Investors chose GTreasury’s Financial Instruments, Risk Management and Hedge Accounting solutions to revolutionize its treasury management operations. GTreasury’s single database design allows the Infrastructure Investments team to visualize, manage and report on the entire investment portfolio from deal initiation through settlement using one integrated system.

Other key benefits for First Sentier Investors are GTreasury’s built-in security across all functions and SaaS-based access, which became especially valuable during the COVID-19 pandemic. GTreasury’s robust rules engine allowed First Sentier Investors to set up clearly defined user roles and responsibilities to segregate duties and minimize risk. With user roles in place, the company was able to outsource back and middle-office functions to a third-party partner and free up the internal team for more in-depth analysis and strategic planning. Chan explains, “I can review the deals entered into the system by our back-office partner, but I can’t actually amend them. On their side, one person is responsible for trade capture, then someone else is responsible for confirmation, which is a middle-office role. The system works very, very seamlessly once you set it up properly.”