Taking the fund administration sector to a new level
The acquisition by Fortis Prime Fund Solutions last year of Hedge Fund Services, the leading hedge fund administrator in the British Virgin Islands, has provided the islands' fund services industry as a whole with the new impetus derived from the arrival of one of the leading global hedge fund administration groups, and a signal that the BVI jurisdiction is no longer limited to the start-ups and smaller funds that have formed the core of its traditional client base.
At the time of the acquisition in March 2006, HFS was already the BVI's largest independent full-service fund administrator, with around EUR2bn in assets at the end of 2005. The firm had an established client base of 53 fund managers, the vast majority located in the US, and serviced 104 hedge funds and funds of hedge funds employing strategies ranging from long/short equity to event-driven. The transaction has boosted the presence of Fortis in the Caribbean, where the Prime Fund Solutions business already has a presence in the Cayman Islands and Curaçao, and added the HFS staff of 18 at the time of the acquisition to its resources in the region. At the same time the BVI business has benefited from access to Fortis's global fund administration network and in particular to its state of the art information technology platform.
The first months following the acquisition were spent in reorganising the business and implementing a new operations model. These changes broadened the scope of trading strategies the office can support and increased overall capacity. Fortis Prime Fund Solutions BVI has been actively seeking new business since the beginning of this year. Whereas HFS was a small business that specialised in servicing smaller funds, the company is now geared up to service larger clients, where necessary drawing on the wider resources of its parent group. This represents a change for the BVI, which in the past has lost servicing work to other jurisdictions as funds began to outgrow the capacity of their administrator.
The acquisition is part of an increased focus by Fortis on its business in the western hemisphere, comprising the US, Canada and the Caribbean. The group has an office in New York which is helping to bring in business from US-based managers, including both funds domiciled in the BVI, which account for around a third of the BVI office's business, and onshore US funds, which make up most of the remainder.
The arrival of Fortis is widely acknowledged to have boosted the credibility of the BVI as a fund services jurisdiction. Although a handful of other leading administrators have had a presence in Tortola in the past, Fortis is the first big name to capitalise on the new wave of interest in the jurisdiction as a fund domicile. The BVI is already competitive and it should be even more so in the future, with a growing array of professional skills not only in administration but the legal and accountingsectors. With most of the top offshore law firms having a substantial presence in the islands, and audit services offered by firms including Deloitte and KPMG, the BVI is now better equipped than ever to service a larger share of the growing offshore hedge fund
business - and perhaps even persuade other members of the top tier of administrators incidentally that it is a jurisdiction they can no longer afford to ignore.
Mark Lancaster is director of new business development with Fortis Prime Funds Solutions
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