Created to meet a burgeoning need for providers of third-party fund services to startup alternative managers, over the past four years Felcom Data Services Inc. has carved out a client base and its own specialist expertise in a highly competitive Canadian market today fought over vigorously by a handful of very large international companies and a number of smaller domestically oriented providers.
Felcom Data, a subsidiary of Jovian Capital Corporation, is a third-party provider of fund accounting and transfer agency services to fund companies with both onshore and offshore offerings. Alternative products such as capital protected notes and hedge funds represent the firm's core activity, accounting for around three-quarters of its business, although it also handles some plain vanilla mutual funds, pooled funds and private accounts.
The services offered by Felcom Data vary according to the exact needs of the client. For managers that require a full-service provider, the firm can deliver a range of management administration services ranging from assistance in the writing of offering documents - most of the funds are memorandum-based - to ensuring that regulatory filings are carried out promptly and accurately.
At this level of service, Felcom Data effectively takes over the administrative functions of the firm in order to allow its principals to avoid becoming overwhelmed by the burdens of corporate functions, an important consideration for start-up fund managers whose priorities are likely to be to focusing on investment management and fund-raising.
This focus on the requirements of startups reflects some of the considerations that prompted the creation of Felcom Data just over four years ago. The firm was born out of the need for a provider in the Toronto area specifically to serve smaller fund managers, who found that many of the existing service providers imposed onerous minimum asset levels for new managers.
Initially, Felcom Data was conceived as an in-house provider to service a particular set of offshore funds, but the business quickly evolved into providing similar services for fund managers with close connections or affiliations. This led to the decision to become a completely independent third-party service provider. The 2004 acquisition of a similar service provider in Quebec City has enabled Felcom Data, which now has a total of around 35 staff, to expand its business to Canada's francophone community and its maritime provinces.
The growth of Felcom Data has been boosted by the fact that many larger fund service providers are unwilling to take on products that do not meet their criteria for being of a minimum size or very standard in their design. While such firms often lack the flexibility to accommodate the uniqueness of each product they administer, Felcom has made it the focus of its business and most important differentiating factor.
This approach has attracted new business from throughout Canada and some leading offshore hedge fund centres through referrals from within the Jovian group and via word of mouth through recommendations from existing clients and industry contacts. Many new clients are fresh start-ups whose first requirement is to understand the process and potential pitfalls involved in getting a product to market.
By Kevin Beatson and Ronald Landry
Kevin Beatson (above) is president and chief executive officer and Ronald Landry (below) is executive vicepresident and chief operating officer with Felcom Data Services in Toronto and Quebec