Subscribe Search

Continued consolidation expected for fund admins

by Alice Murray 2 July 2019

A recent alternative fund administration survey, carried out by eVestment, highlights continued and robust levels of M&A in the space, as well as revealing top locations for growth and ILPA template reporting moving into the mainstream.

Here is an overview of the key findings.

Continued M&A throughout 2018Activity highlights:

  • Apex Group acquired nine fund administrators between Jan 1 2018 and Q1 2019
  • SS&C completed purchases of software providers DST and Eze Software
  • State Street completed acquisition of Charles River Systems

“We have seen significant activity from private equity investors investing in private capital service provider businesses and forming European and global players. After many banks have exited the business, we believe we will see some re-entering by creating new business units or [via] acquisitions. We believe there will be a consolidation within the next five years which will coincide with private equity houses exiting their investments in the private capital space.”- - Mid-Sized Global Fund Administrator“We anticipate further consolidation in the fund administration sector driven by increased regulatory and data management demands, growing fund sizes and [increasing] sophistication. There will also be ‘disruptive’ providers who enter the market with innovative technical solutions which reduce cost. These will compete with existing providers for parts of the value chain.”- - Global Custody Bank

Geographical growth

  • US still top destination for fund administration growth
  • Interestingly, Europe remained second, despite ‘tepid economic growth and Brexit uncertainty’
  • Most fund admins have a presence across the EU as well as cross-jurisdictional capabilities. Some respondents also flagged necessity for ManCo structures in the EU27, and for a presence in Luxembourg specifically.

We do not need to establish new legal entities, we already have a significant footprint and an established service offering in the EU27, and we have the licenses and permissions in place to continue serving our clients post-Brexit. In preparation for Brexit, we have built out our service capability in our EU27 operations so that we can continue serving clients in all our jurisdictions.”- - Global Custody Bank

[su_note note_color=”#ffffff” text_color=”#3D8094”]

Compounding these trends, Apex’s reported private equity and debt AUA for YE 2018 reached $234bn, marking an increase of 2778%

For reference, Citco’s combined private equity and debt AUA came in at $250.4bn, an uptick of 11.3%. State Street reported $383.68, up 9.6%; while SEI counted a total of $327.5%, up 21.5%.

The biggest declines were reported by Maitland, which saw AUA of private equity and debt drop 72.5% to $1.89bn AUA, and O’Conner Davies Administration fell 61.5% to $0.22bn.[/su_note]

Private equity and debt funds

  • ILPA template moves into mainstream: for last year’s survey, fund admins reported serious consideration by client base to adopting ILPA reporting. This year’s survey saw an uptick in the phrasing “standard offering”
  • Furthermore, 80% of respondents said they saw a rise in usage of the ILPA template versus 50% in 2017.

While none of these findings are particularly outrageous, it is definitely worth downloading the full report to see the tables for yourself. Especially if you’re thinking about outsourcing for the first time, or changing provider. The tables are cut neatly in various ways, showing AUA for different asset classes, and regional breakdowns.

Click here to download.

27 November 2019

The data journey waits for no one

Private equity’s data journey may only just be setting off, but like any expedition, packing the best equipment and selecting the right companions make reaching the final destination a lot more enjoyable

22 November 2019

AIFMD II: WTF? (What the fund, obvs)

Following a review of the AIFM Directive in 2017, where are we now, what has happened, will there be an AIFMD II?

18 November 2019

ESG Role Call

As LP demands on ESG continue to build, what types of skills and backgrounds should PE firms be looking for, and what does the role of ESG practitioner mean today?

15 November 2019

Views from the Summit

Highlights from two of the technical breakout sessions at this year's BVCA Summit in London

8 November 2019

Fund structures are so last season

As new waves of regulation continue to hit private equity, managers are quietly shifting to the peaceful waters of deal-by-deal investing

8 November 2019

Time to bite back

For too long operational leaders have been yes men, it's high time they became key men