Fri, 13/04/2007 - 06:59
Joost Lobler outlines the strategy and thinking that is driving the global expansion and growth of Equity Trust's alternative fund services business.
HW: What is the background to the alternative fund services business at Equity Trust?
JS: Although Equity Fund Services is a new name in the market, we have been involved in fund administration for more than 15 years. Just like other companies that started to provide offshore trust services (e.g. Citco, Fortis), in the course of time also Equity Trust has ventured out into hedge fund and fund of funds administration.
HW: What is the management structure of the Equity Fund Services business within Equity Trust?
JS: We have a global management team, consisting of a head of risk/legal a head of operations, a head of IT and a CFO. As Managing Director I focus on business development.
HW: Which alternative investment sectors do you service and what services to you provide to alternative investment funds?
JS: We basically provide all the 'standard' administrational services a fund needs, such as NAV calculation, shareholder services, corporate actions etc. For funds of funds we also provide custody. We service hedge funds and funds of funds, private equity funds, real estate funds and even mutual funds (without the shareholder services). We provide a web-based reporting suite for both fund managers as well as investors.
HW: What is the size and geographic reach of your alternative fund services business?
JS: We are a global operation. Equity Trust has offices in 30 countries and Fund Services are provided from the following key locations: Luxembourg, London, Amsterdam, Jersey, Guernsey, New York, Cayman Islands, BVI, Hong Kong and Malaysia. We currently have around USD 15 billion under administration.
HW: What are the strengths of the Equity Fund Services business and how will clients benefit from your suite of services?
JS: I strongly believe that every fund administrator competes with one basic thing: service. We have not lost a client during the last 6 years because of service issues, we don't have capacity issues and we are reasonably priced. I think that should be enough for potential clients to at least get in touch with us.
HW: As Managing Director at Equity Fund Services what is your strategic focus for the business?
JS: Our strategic focus is controlled growth, i.e. to grow as fast as we can without jeopardising the quality of our client base or increase our risk profile. We are actively looking to acquire portfolios or companies as well to reach this goal. Equity Trust Group plans an IPO in 12-18 months and our Fund Services activities are an important element to diversify the Group's income source.
HW: Do you have a cross-selling strategy within the various divisions at Equity Trust and, if so, how are you executing your cross-selling strategy?
JS: As a group with five business lines (Corporate Services, Structured Finance, Private Clients, International Incorporations and Fund Services) we obviously have a cross-selling strategy. However, we are not cross-selling all services to everybody. For example, we are very selective with providing directorships in case we also do the administration. Generally speaking, we do not want to increase our risks disproportionably for a relatively small fee.
HW: What growth do you expect to see in the alternative investments market this year, and in which regions do you expect to see growth?
JS: Obviously the fastest growing area in absolute numbers is still Asia. There is a lot of money flowing to Asia and there is also a lot of money created in Asia, so we see existing funds growing rapidly and we see a lot of Asian managers starting. We expect the market to continue to grow with 40-50% this year. We are expanding our activities in Hong Kong for this reason.
We expect the growth in Europe to be moderate, although we see a lot more of start-ups this year in Switzerland and in Austria. We expect that, although the growth of activity in the US might be similar to last year, fund administrators there will see an increase in demand for their services, since more and more (fund of funds) managers feel obliged to outsource their administration and custody as a result of stricter SEC controls.
HW: In which sector do you expect to see the biggest growth in 2007, in terms of assets under administration?
JS: For us that probably will be funds of funds.
HW: Where do you expect to encounter challenges in executing your strategy for the business and how do you propose to overcome these?
JS: The key for every administrator is its technology. Although our technology is 'state of the art' already there is a constant need for upgrading and adjusting to clients' needs. This is a challenge, because it always involves investments in people and systems, which is an expense many administrators find difficult to digest!
HW: What were the high points of 2006?
JS: In the last quarter of 2006, after I started working for the group, we established our 'brand' Equity Fund Services, started our marketing efforts and got a pipeline of new business going. I think those are enough high points for just three months, I am sure there will be more in 2007!
HW: Where would you expect the business to be by the end of 2007?
JS: We budgeted to grow with a decent percentage, although it is too early to predict if that was too high or too low. If we succeed in acquiring another fund administrator before year-end the numbers might look quite differently anyway, so let's say if we grow considerably more in each market - which means we gain market share - we will be happy.
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Fri 13/04/2007 - 06:59
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