The importance of being a specialist
By Ronan Daly, Managing Director, BISYS Hedge Fund Services (Ireland)
Although Dublin is home to administrators of both hedge funds and traditional long-only vehicles such as unit trusts and Oeics, it doesn't necessarily follow that combining the two business areas is the best way to build up a substantial business and achieve economies of scale.
Having set up here in Dublin in 1998, BISYS Hedge Fund Services (Ireland) base has 260 staff and USD 38bn in hedge fund assets, about a fifth of the worldwide total for the BISYS group, which also comprises servicing centres in the United States and Bermuda.
Bermuda is our offshore servicing centre for US managers, while Dublin primarily serves European-based managers. Some administrators use Dublin as their sole offshore centre serving both US and European clients, which means they have to work in shifts. But BISYS and its main competitors prefer to use servicing centres in or around the Caribbean with optimal time zones for US clients. This means that the Dublin office is very much looking into Europe rather than looking back at the US.
What is significant about our establishment in 1998 is that we were one of the first groups in Dublin to focus exclusively on hedge funds, whereas other leading administrators that were already active in Ireland tended to be generalists which did a bit of hedge fund work alongside traditional long-only funds.
When the firm launched in Dublin under its previous name of Hemisphere, we pinned our colours to the mast by insisting that we would service exclusively hedge funds. Making this clear statement to the marketplace turned out to be a remarkably successful strategy that enabled us to gather assets very quickly over the past five or six years. According to repeated surveys of the market, we are now the largest administrator of single manager hedge funds in Europe.
Since our arrival other groups have subsequently established themselves in Dublin as specialist hedge fund administrators. It is interesting that firms that were previously happy to be considered generalists are now trying to reposition themselves as specialists in alternative investments. This reinforces our conviction that we chose the right strategy in differentiating ourselves right from the start.
In addition, five or six years ago saw the start of a boom in hedge fund start-ups in Europe, mainly in London. That period saw the launch of hedge funds that today have become huge, run by managers who are now practically household names in the alternative investment world.
When they launched their businesses in the late 1990s, these managers were attracted to service providers that were very clearly hedge fund specialists, with tailor-made platforms and systems and staff with plenty of hedge fund experience.
To get us going at the start, we brought in a lot of staff from the Bermuda office, as well as Americans and Canadians. What the business needed from day one was people who didn't scratch their heads and look puzzled when they heard words like derivatives and equalisation. While other Dublin administrators were starting from a basic knowledge level of zero, we brought in a lot of expertise with us.
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