Multi-award-winning hedge fund administrator Opus Fund Services was established in Bermuda in 2006, subsequently expanding its footprint into the US with offices in Chicago (2008), San Francisco (2009), New York (2013) and Portland (2014). It serves over 275 fund managers and 400+ funds with a combined AUM exceeding USD10.5bn.
Last year saw another flurry of activity among hedge fund administrators, both large and small, and for a mid-sized administrator with an institutional offering, Opus was able to reap the benefits; this was partly due to M&A activity, and partly due to banking groups deciding to focus on other areas of the market and/or shedding certain types of hedge fund clients.
"Such developments have yielded some good opportunities for us b ecause some hedge fund managers have been looking for a new home and we are well placed to cater for them. This was an interesting dynamic that played out in 2015, and I think it will continue in 2016. There was a wide range of fund launches across a variety of asset classes in hedge funds as well as private equity and venture capital, direct lending and marketplace lending," confirms Jorge Hendrickson (pictured), Director of Sales and Business Development.
Indeed, Opus is at the vanguard of providing administration services to managers investing in the marketplace or `peer-to-peer' lending space.
"Orchard, a prominent technology and infrastructure provider, recently published an infographic showing the main marketplace players and Opus Fund Services is listed as one of only two administrators. We got into this space very early (2011), and today we service 55 funds in this sector; as a percentage of our overall client book it is quite small, but it is quite a significant percentage of the marketplace lending ecosystem," says Hendrickson.
Over time, Opus has built its operational capabilities to enable it to work with many of the leading platforms such as Lending Club, Prosper Marketplace etc.
"We now have clients transacting in real estate, consumer loans, small business, education and medical. We were an early adaptor and that has certainly helped us to establish a solid reputation. We work closely with the platforms, technology providers to those platforms, as well as attorneys, tax firms and third party valuation companies, which are increasingly being used," adds Hendrickson.
The technology capability that Opus has established enables it to connect with marketplace platforms and perform accurate reconciliation and reporting on the underlying loans in a fund portfolio. Indeed, Opus is able to report portfolio-level detail and fund-level detail to its clients and their investors.
Part of the reason why marketplace lending has become so popular is that some institutional investors have been disappointed by the level of returns they've been getting from their hedge fund allocations for the fees they've been paying.
Not that hedge funds are being overlooked to any great degree. Hendrickson thinks that as the industry evolves, more institutional money will start going to institutional-quality funds operating in the USD250mn to USD1bn AUM range; funds that are nimble and better placed to generate solid risk-adjusted returns.
"One of the biggest problems that new managers face is the amount of distraction they face over the first year or two; in other words the operational process interferes with the investment process. But the industry is becoming more efficient, allowing smaller managers to check off the number of institutional processes through outsourcing," says Hendrickson
