The private funds industry has evolved significantly over the past decade. Fund structures are more complex, investor expectations are higher, and reporting timelines continue to compress. At the same time, operational demands have expanded across accounting, compliance, treasury, investor services, and technology. Despite these changes, many fund administration models remain unchanged, relying on standardized service structures that fail to reflect how today’s managers actually operate.
A middle-market private equity manager launching its third fund operates very differently from a multi-strategy credit platform managing global vehicles across multiple time zones. Their operational needs are not the same, and neither is the level or type of support required. Some firms require ongoing operational coverage, others need support within a specific function, and many are looking to maintain internal control while adding scalable expertise around their existing team. This has driven the growing adoption of co-sourcing across private markets.
Rather than forcing managers into a rigid outsourcing model, co-sourcing introduces a more flexible approach that allows firms to build operational support around the way they actually work. It combines the benefits of outsourcing with the oversight and control of internal teams by embedding operational expertise directly into the manager’s environment.
At Petra, that flexibility takes shape through three distinct co-sourcing models: vertical, horizontal, and customizable engagements. The right approach depends less on size and more on where operational pressure exists and how a manager wants to scale.
As new funds launch and reporting complexity increases, internal teams often become stretched across multiple vehicles, deadlines, audits, and growing investor demands. What was once manageable with a lean team has quickly become a constant effort to manage competing priorities with little room for error. Vertical co-sourcing solves for this by embedding an experienced team directly into the GP’s environment to fully support a designated set of funds.
In this structure, the team operates as an extension of the internal operations function, working within the client’s existing systems, workflows, and reporting processes while taking ownership of day-to-day fund administration responsibilities. Instead of building additional infrastructure internally, firms gain access to experienced professionals who have sat in the CFO seat before and already understand the operational realities of private markets. As a result, reporting becomes more consistent, timelines become more manageable, and internal leadership gains the capacity to focus on strategic priorities rather than day-to-day operational demands.
Not every operational challenge requires full fund-level support. In many cases, pressure builds within a specific function like investor reporting, treasury operations, or portal management. These areas often become bottlenecks, especially when internal teams are balancing multiple responsibilities simultaneously.
Horizontal co-sourcing allows managers to assign ownership of an operational function while retaining broader control internally. Rather than managing an entire fund structure, the partner assumes responsibility for a defined workstream. With a horizontal co-sourcing model, GPs can strengthen areas that directly impact LP experience and operational efficiency without changing their broader infrastructure. For example, a credit manager may engage Petra to manage investor reporting and portal administration across all funds, creating a more streamlined LP experience while allowing internal teams to focus on deal execution and portfolio oversight.
As firms continue to grow, horizontal co-sourcing often becomes an efficient way to eliminate operational bottlenecks without adding significant internal headcount.
Increasingly, managers don’t fit neatly into a single operational structure. Some firms need support during periods of growth, while others require temporary operational expansion during a fund launch or systems implementation, and still others operate across multiple strategies with different servicing needs across teams and regions.
Customizable co-sourcing allows firms to build an engagement model around their specific operating environment, internal capabilities, and strategic goals. A firm may use horizontal support for investor services, add vertical support for a newly launched strategy, retain internal oversight of treasury and cash operations, and expand the fund administrator’s role over time as operational needs evolve.
Rather than adapting internal processes to fit a service provider, the servicing model adapts to the manager. This flexibility has become increasingly important as firms seek operational partners capable of scaling with them over the long term. Petra’s co-sourcing framework is designed to evolve alongside client needs while maintaining continuity across teams, systems, and workflows.
The success of any co-sourcing relationship depends less on the structure itself and more on the quality of the partner behind it. As managers evaluate fund administrators, a core set of capabilities stands out.
The traditional approach to fund administration no longer reflects how private market firms operate today. As complexity increases and operational demands continue to evolve, managers require more than a standardized service model. They need flexibility, experienced teams, and an operating structure that can scale alongside the business.
This is what continues to drive the adoption of co-sourcing across private equity and private credit. Whether through vertical support, horizontal specialization, or a fully customized engagement, the focus remains consistent, building an operating model that enables fund managers to scale efficiently while maintaining visibility and control in their data and processes.
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