Private equity firm 3i, owner of hedge fund administrator Fulcrum Group, has announced the signing of an agreement for the Bermuda-based firm to merge with near neighbour Butterfield Fund
Private equity firm 3i, owner of hedge fund administrator Fulcrum Group, has announced the signing of an agreement for the Bermuda-based firm to merge with near neighbour Butterfield Fund Services to create a new force in alternative fund administration overseeing nearly USD100bn in assets.
Following the transaction, which is subject to regulatory authorisation and government approval, 3i will take a majority shareholding in the combined company, to be known as Butterfield Fulcrum Group, with the Hamilton-based Bank of N. T. Butterfield & Son retaining ‘a substantial equity stake’, reported to be 40 per cent. Merrill Lynch advised Fulcrum Group on the deal, while UBS Investment Bank advised Butterfield.
Headquartered in Bermuda, the combined firm will have around 400 employees in nine countries. Fulcrum already has offices in New York, London, Dublin and Bangalore, India, while Butterfield Fund Services is active in the Bahamas and Guernsey; both firms are active in the Cayman Islands and in Canada, Fulcrum in Waterloo, Ontario, Butterfield in Halifax, Nova Scotia.
Butterfield Fulcrum Group will have close to USD100bn in assets under administration from nearly 1,000 hedge funds, fund of funds, private equity and institutional investment management clients. The partners say it should rank among the world’s top 10 independent alternative administrators.
According to the most recent survey of hedge fund administrators published by HFM Week, Butterfield Fund Services had USD37.7bn in single-manager hedge fund assets under administration and Fulcrum USD11bn in April this years, while Butterfield also had USDF41.2bn in fund of hedge funds assets.
‘This is an enormous win-win for both companies that will leverage the sales and operational capabilities of Fulcrum Group, and the tremendous customer relationships and global reputation of Butterfield Bank Group,’ says Akshaya Bhargava, who became chief executive of Fulcrum followings its acquisition by 3i last year.
Alan Thompson, president and chief executive of Butterfield, says: ‘The merger of these two highly successful businesses will result in significant business growth, more services for fund administration customers and career opportunities for employees. Butterfield and Fulcrum are creating a company that will have a powerful presence in fund administration globally.’
Bhargava will become the chief executive of the merged company and Jill Considine, who was appointed chairman of the Fulcrum Group last month, will head its board. Thompson and Graham Brooks, an executive vice-president responsible for international business at Butterfield, will also join the board, along with other representatives from Fulcrum and 3i.
‘This merger brings together two highly complementary fund administrators to offer a full-service platform of significant scale that has a business model and operational structure to achieve industry leadership,’ Considine says.
Both Fulcrum and Butterfield executives declare that ensuring seamless delivery of client services during the integration is a top priority for Butterfield Fulcrum Group. ‘Clients will continue to receive the same high levels of service and from the same relationship centres while the two companies are being integrated,’ Bhargava says. ‘We expect integration to be completely seamless from a client point of view.’
Whitney Bower, a partner at 3i, adds: ‘We are proud to have been a part of Fulcrum’s growth and believe that Butterfield Fulcrum Group will be a major force in the global fund administration industry.
‘Our industry knowledge and strong global network have enabled us to support Fulcrum’s international expansion, particularly in Europe and India, and we very much look forward to accelerating this growth through the partnership which this merger brings.’
