The recently announced acquisition of Butterfield Fulcrum (BFGL) underscores the continued interest that private equity funds have in fund service providers.
With over 200 fund administrators operating globally, the industry provides many opportunities for private equity investors. However, both private equity firms and funds in the process of selecting an administrator need to understand some of the potential minefields administrator firms are facing during the next stage of growth in alternative investing.
The Butterfield Fulcrum acquisition partnered firm executives (Glenn Henderson and Tim Calvey) with USD2.6bn private equity firm BV Investment Partners. According to the firm assets under administration are currently over USD70bn; and New York-based research firm Carbon360 estimates BFGL’s 2010 revenue as USD55.5m.
“Private equity firms have to be prepared to bear expenses to streamline the fund administration process and to stay ahead of the constant innovation in technologies within this space,” warns Daniel Golyanov, Director of Research for Carbon360. Just as important is the research by funds considering a fund administrator. “They should be focusing on ownership structure as well as the depth and breadth of service offerings before making a decision.”
