The acquisitive Mainstream BPO has expanded its reach in the credit union and customer-owned bank fund admin market with the purchase of a piece of the IRESS business inherited through that company’s takeover of Financial Synergy. The deal also gives both companies a closer relationship with Equity Trustees.
Mainstream BPO, which has expanded into several offshore markets in the past 12 months, has paid an estimated $3.5 million to acquire the IRESS business unit, which consists of 14 super fund clients, a retail fund and seven ‘retirement savings accounts’ with a total of $650 million under administration. While the amounts are not big, the deal has more significance because of the relationships involved.
The retail fund in the deal uses Equity Trustees as its trustee. Mainstream uses the Acurity software system, developed by Financial Synergy, which was acquired this year by IRESS for $90 million.
Byram Johnston, the executive chair of Mainstream BPO, said on Friday that his company had already had a great working relationship with IRESS and would now have a closer relationship with Equity Trustees.
“The interesting thing about this deal is that it shows how the main providers are collaborating with each other in the interests of the clients,” he said. “We will transition these new clients quite easily and it will beef up our funds under administration… People are working together more than we used to.”
The fund administration market appears to be entering an interesting phase. Link Group bought White Outsourcing late last year and has indicated its commitment to the market. Mainstream BPO has made several acquisitions and expanded offshore. And the other two related listed companies, OneVue and Equity Trustees, have continued their growth trajectory. The privately owned FundHost has also expanded organically in the past two years. We might see some alliances between these companies, each of which has a slightly different service offering.
Martin Smith, the managing director and co-founder of Mainstream BPO, said that the acquisition added scale to the super fund business and also access to new clients through a trustee platform.
Greg Bright is publisher of Investor Strategy News (Australia)