Interview with Peter Hughes, group managing director, Apex Fund Services – Providing a full solution set that spans middle and back office fund administration, as well as specialised reporting and fund formation: that’s the primary focus at Apex Fund Services, one of the world’s largest independent fund administration companies with more than USD23billion in AuA.
With an on-the-ground presence in the Middle East for nearly six years, the firm has seen first-hand the evolution of local fund managers embracing independent administrators.
“When people leave banks or other institutions to set up their own funds, we want them to come to us first. With 28 global offices servicing all the main fund domiciles, we’re in a position to provide totally unbiased advice to new managers,” explains Peter Hughes, group managing director, Apex Fund Services.
Apex has offices in Bahrain, Dubai and Abu Dhabi. Despite the region’s obvious wealth, the market for emerging talent has been “quite tight” this year says Hughes. Managers willing to consider Shariah-compliant fund structures, however, could find the Middle East highly attractive for raising significant capital.
“Mainly this year we’ve seen existing clients launching new products, but there have been some new managers relocating to the region who are perhaps based in high tax European jurisdictions and decide, ‘If I’m going to run an asset management business, why not do so in a zero tax location’.”
This is becoming an important issue as global regulation drives up the costs of doing business. Increasingly, managers are looking to cost-efficient jurisdictions such as Switzerland and Singapore…and, slowly, the Middle East. Having the confidence that a global administrator is there to support whatever fund structure a manager chooses is crucial.
“We’ve seen a few starting up and going on to our low-cost fund platforms. Some are choosing to use our Shariah platforms, which offer a low-cost way to bring Shariah-compliant funds to market,” says Hughes, adding, “Managers can set up funds on our platforms for as little as USD5K. By providing them not just with fund administration but also middle office support, software tools (OMS, EMS systems), risk systems etc in a cost-effective way they don’t need to think about anything else, other than to decide where to locate the office.”
Apex has a range of fund platforms to support managers, from offshore Cayman funds and UCITS, to local-domiciled funds. Those managers wanting Shariah-compliant structures to tap into regional capital can choose either Apex’s Luxembourg platform for regulated funds, or its offshore Bermuda platform.
“Shariah funds can take up to nine months to set up and cost USD200-300K, which is why launching on a full-service Shariah platform like ours is an ideal stepping stone for managers to build up a track record,” says Hughes.
“It removes risk and also means that if there’s seed capital they can start investing it immediately, whereas if they go it alone, set up an advisory company, wait to get regulated in the Dubai International Financial Centre, it could take months, by which time that seed capital might have gone elsewhere.”
To successfully administrate Shariah funds requires specialist systems that respect the principles of Shariah law. An ability to send statements and reports out to clients in Arabic is also necessary. Over time, Apex has developed this expertise and is well positioned to capitalise on the future growth of Shariah funds going forward.
“I’ve believed in Shariah products for a long time because they are good clean products. Going forward I think these structures will become an important piece of the asset management puzzle.”
