Castle Hall today announced a comprehensive rebranding, marking the next stage of the company’s expansion. As “Castle Hall: The Due Diligence Company”, the firm’s updated identity highlights that due diligence is no longer limited solely to alternative investments. The firm’s new tagline, “The Due Diligence Company”, also reinforces that due diligence is part of the governance, risk and compliance framework adopted by investment boards and trustees. Castle Hall provides clear segregation of duties between asset owners’ due diligence obligations and the risk-taking functions of front office professionals and traditional investment advisors and consultants.
“Due diligence is now multi asset class, and no longer just about ‘alternatives’” said Chris Addy, Castle Hall’s CEO. “It was hence time to remove the word “alternatives’ from our corporate identity”.
When purchasing an investment product offered by a third-party money manager, investors unavoidably become exposed to the business and operational risks of each external manager organization – irrespective of asset class. Investors face the risk of financial loss if operational controls are not effective in key areas such as asset existence, valuation and cash controls. Business risk issues such as conflicts of interest, cyber security preparedness and effectiveness of compliance programs are also relevant whenever any third-party money manager is appointed.
Castle Hall began serving clients in 2007 when due diligence focused on hedge funds and other “alternative” investments. Ten years later, the firm now conducts due diligence on behalf of clients across all asset classes, including private equity, real estate, infrastructure and equity and fixed income long only mandates. Structures reviewed include private funds, registered funds and trusts, and managed accounts.
“Castle Hall’s clients are rapidly implementing consistent due diligence programs across all asset classes” said Addy. “Many investors have now established due diligence policies which define their due diligence process, both to onboard new investment managers and then to monitor existing portfolio relationships. Taking into account asset class risk, manager specific risk and investment size, investors can use Castle Hall’s tools to create flexible, risk sensitive diligence programs across their entire portfolio.”
Castle Hall’s rebranding also responds to the institutionalization of the due diligence function, which is now increasingly owned by investors’ governance, risk and compliance functions rather than the front office. This restructuring of reporting lines allows institutional investors to create clear segregation of duties between the investment function and the assurance, risk mitigation role of due diligence.
“Traditionally, operational due diligence was often owned by front office investment professionals as a subset of the investment decision making process” said Anne Coady, Managing Director. “Equally, much of the legacy third-party operational diligence information has been provided by investment consultants and advisors, despite the advisors’ primary function (and revenue model) being their ability to create manager buy lists and generate performance”.
As due diligence expands beyond the traditional hedge fund niche, governance risk and compliance professionals are sensitive to the inherent conflict of interest embedded within the investment consulting model. “One of our clients recently told us that an oil company does not hire a company to build a pipeline, and then ask the same construction firm to also complete the environment assessment” said Coady. “Governance, Risk and Compliance Professionals are looking for consistent, evidenced and auditable due diligence workflows, free of conflicts of interest. Castle Hall does not recommend investments or build client portfolios, facilitating the segregation of duties which is at the heart of objective, unbiased due diligence. We are delighted to offer clients service options which meet the evolving needs of the asset management industry.”