Why every multinational needs entity portfolio management

Entity portfolio management services, in tandem with the right technology, can help global companies navigate an increasingly complex regulatory environment
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The last few years have not been easy for business leaders. The industries they work in have been significantly impacted by a myriad of risks and threats. As the consequences of the pandemic and Brexit continue to unravel, global businesses have been further buffeted by a war on Europe’s borders. This perfect storm of challenges has created a global cost of living crunch, an energy security crisis and supply chain shortages. In an era of uncertainty, where nothing is what it was, large-scale regulatory changes are emerging across the entire financial services sector.

In this challenging environment, how do general counsels, company secretaries and C-suite managers – who are responsible for managing hundreds, if not more, companies across dozens of countries – ensure healthy governance, transparency and accountability across their global portfolio of entities? How do they avoid fines and prevent reputational risk by filing correctly while meeting deadlines? 

It’s a conundrum that the Citco group of companies (Citco), experts in independent fund administration for the alternative investment industry, wrestled with for some time before coming up with a solution. Led by Kariem Abdellatif and building on the specialised servicing platform that it developed in the late 2000s, in 2021, Citco created Mercator by Citco, a centralised platform that provides clients with efficient, effective, and consistent Entity Portfolio Management services (EPM). 

The data-centric platform enables businesses to gain a fully accurate and truly objective picture of the landscape

“What separates Mercator from other platforms,” says Abdellatif, “is our people. Spanning 180 different jurisdictions, Mercator pools its specialist team’s vast accumulated knowledge of complex regulatory frameworks in each territory into a knowledge bank. This pool of knowledge, delivered through our proprietary technology platform, Entica, provides our clients with unrivalled and unparalleled visibility 24/7, 365 days a year.”

Whenever an individual corporate maintenance-related regulation changes, Mercator registers and vets it. Subsequently, clients receive a notification via the Entica platform, which Abdellatif explains “is a custom-designed single pane of glass that gives clients total control over their global entity workflows.”

Entica, says Abdellatif, “instantly notifies the company secretaries and general counsels whose businesses are likely to be directly affected by the regulatory change, providing full transparency on fundamental regulatory adjustments to the right people in the right place at the right time… In this sense, Entica is very much a vector for knowledge delivery.”

Beyond enhanced visibility and predictability, the system also delivers cost-efficiency benefits. Says Abdellatif: “Due to significant variations between clients, it is very difficult to provide one single figure for cost savings. However, we have seen instances where clients achieved between 30 to 35% in savings by using Mercator’s offering. That said, the vast majority are primarily interested in the robustness of the framework, avoiding fines and mitigating risk, which of course, are also costs.” 

In terms of efficiency, anecdotally at least, “Entica is also adding great value”, says Abdellatif. “As part of a continuous improvement drive, we are constantly talking to our clients. Many organisations tell us that Entica is so deeply woven within the fabric of their businesses that it has become the metaphorical ‘water cooler’ where company secretaries, accounting departments, tax divisions, and auditors gather and start to communicate.”

The data-centric platform generates unique perspectives, which enables businesses “to gain a fully accurate and truly-objective picture of the landscape”.

Abdellatif, who has accrued over three decades of experience in the international corporate servicing sector, explains: “We aggregate a lot of data on our system, which means it can be interrogated to discern different practices. Counter-intuitively, our 2023 UK EPM special report revealed that despite the cost-of-living crisis, high inflation and interest rates, the UK is actually 36% cheaper and 40% faster than the combined average of 180 jurisdictions worldwide for incorporating and managing multinational legal entities. This really highlights the power of data to bring to the fore patterns and trends that we wouldn’t have been previously able to identify.”

With more and more companies turning to EPM specialists, he hopes that EPM will be recognised as a discipline in its own right. As for Mercator, Abdellatif says that “it’s looking with considerable interest to the potential of artificial intelligence”.

“In the future, AI may well prove to be a powerful tool that will augment the stellar insights that our staff, our most precious resource, provide to our clients,” he concludes. 

That is no doubt a sentiment that Gerardus Mercator, the pioneering Flemish cartographer after which the business is named, would have shared. 

Find out more about Mercator’s services and technology at mercator.net