INDOS Financial Limited (INDOS), a UK independent depositary, has passed the milestone of undertaking depositary services for 100 alternative investment funds with assets over USD20 billion.
These figures represent a substantial growth in the business of 37 per cent in the number of funds (from 73) and 54 per cent in assets under depositary (from USD13 billion) since end-December 2016.
Bill Prew (pictured), INDOS CEO explains that the added value arising from the employment of an independent depositary, as opposed to a depositary affiliated to the fund administrator, was becoming increasingly recognised by fund managers, fund directors and investors.
“In many cases,” says Prew, “depositary services are viewed as a tick-box subset of fund administration but this model inevitably results in conflicts of interest given that one of the key roles of a depositary is to oversee the output of the administrative function and flag up problems.”
“INDOS is responsible for reviewing each NAV calculation and providing the fund manager and the Board with regular, tailored reports,” adds Prew, pointing out that INDOS is actively present (either in person or via telephone) at the majority of fund board meetings. “By contrast many managers who transfer their depositary requirements to us say they had little active engagement with their (former) depositary and were very rarely notified of issues whether at their affiliated administration business or otherwise. In several cases we have identified issues following take-on that clearly existed previously but were either not identified or went unreported.”
Other factors have made an important contribution to the firm’s expansion. Originally founded to provide ‘depo-lite’ services to hedge funds as the AIFMD (Alternative Investment Fund Managers Directive) came into force, INDOS has now broadened its range to include private equity and real estate funds, some 27 of which are now clients. Since May 2017, the firm has evolved further to offer full depositary services to UK unauthorised funds such as investment trusts and has recently announced two new clients in this area.
“An important feature of the increasingly strict regulatory environment in which investment managers now operate is the responsibility to achieve value for money from all external service providers,” says Prew. “INDOS has achieved the scale and industry reputation where it regularly competes as an independent depositary against affiliated providers for larger mandates, delivering a tailored, value-add and more cost-effective service to clients.”
