Global Custodian Private Equity 2018 | Page 11

[ U P D AT E ] Mergers and acquisitions dominate PEFA headlines IT’S NOT JUST HEDGE FUND ADMINISTRATORS FACING CONSOLIDATION, THERE HAS BEEN PLENTY OF MOVEMENT ON THE PRIVATE EQUITY SIDE AS WELL DURING THE HALF OF THE YEAR. T he first half of the year in the fund ad- ministration world was once again dom- inated by mergers and acquisitions (M&A). However, while this was commonplace on the hedge fund side, private equity adminis- tration has now fallen into the trend. Some of the most notable deals included Apex Fund Services’ acquisition of private equity administrator Ipes, and SSG Group’s purchase of Augentius. The takeover of Ipes, which will add $160 billion to Apex’s assets under administra- tion, follows its recent takeover of Deutsche Bank’s alternative fund services business, which also services private equity funds. The purchase of Ipes will take Apex into the ranks as fifth largest administrator by assets. Meanwhile Ultimus Fund Solutions agreed to buy Woodfield Fund Administration, a privately-owned private equity adminis- trator, and Centaur Fund Services said it will build its private equity and real estate service following the acquisition of Luxem- bourg Capital Partners. Outside of the M&A scene, Northern Trust announced it will merge its hedge fund and private equity administration businesses to form a single North America Alternative Fund Services unit. The launch of the unit will hope to capitalise on the growing trend of hedge fund managers incorporating private equity and other alternative strategies into their portfolio. “Bringing private equity and hedge fund services together leverages Northern Trust’s strong footprint in both sectors and enables us to deliver increasingly innovative solutions for this dynamic market,” said Northern Trust’s head of Alternative Fund Services Peter Sanchez at the time of the announcement. The growth in M&A between adminis- trators reflects the growing importance of the asset class. Private equity assets under administration increased 18% to $2.5 trillion in 2017. For administrators to grow in-line with the asset class, more will turn to merg- er small and mid-sized privately-owned administrators to capitalise in the surge of outsourcing. The technological capabilities of some of the biggest players through acquisitions means they are able to offer solutions that reduce costs, forcing more pressure on smaller, independent providers. “The best of the upstart fund administra- tors are aggressively tackling these chal- lenges and growing quickly because of their efforts, while the largest fund administra- tors are realising that they are better off buying what they need to better compete,” added Andraca. “Just like what has hap- pened with many FinTech companies, fund administrators seem to be more aware that they need a ‘buy or be bought’ strategy.” Private Equity Issue 2018 globalcustodian.com 11