Link Group, which entered the managed funds administration business late last year with the acquisition of White Outsourcing, looks likely to shake up this disaggregated part of the industry following a re-branding exercise to be announced today (June 19).
White Outsourcing is the main competitor for what is the only “full-service” managed fund outsourcing company – the listed Mainstream BPO. However, there are several other companies which provide most of the same services and, in some cases, additional and different services in this space. No-one dominates it.
Funds management administration in Australia is ripe for consolidation. And a proliferation of funds management products, both in Australia and internationally, and with an increasing range of product structures, such as ASX-listed ETPs, the demand for funds management administration services is growing strongly.
Link Group, which is sitting on an acquisition war chest following its successful listing and acquisition of SuperPartners, has signalled its desire for further acquisitions and was reported as having recently teamed with Macquarie Infrastructure in an ultimately unsuccessful $2 billion-plus bid for the NSW Lands Titles Registry. It has made much smaller acquisitions recently, though, such as Adviser Network from Lonsec, announced this month.
White Outsourcing, formerly owned by the listed Steadfast Group, will form the core of the newly branded ‘Link Fund Solutions’, according to Paul Gardiner, the chief executive of Link’s Corporate Markets division, under which it will sit.
Link Fund Solutions now offers middle and backoffice administration, fund accounting, custodial and unit registry services.
It is a relatively small business for Link, with about $43 billion under administration, but offers a lot of complementary advantages with Link’s larger core business of super fund member administration and share registry.
Fund managers are increasingly looking to list their products to satisfy demand from SMSF trustees. Also big super funds are becoming increasingly retail in their approach – with far greater choice – to satisfy demand from larger-balance members.
Gardiner said the company would be looking to grow Link Fund Services aggressively through organic means, capitalizing on the synergies with other Link capabilities.
“We can draw on what we have learnt from our share unit registry pedigree, the analysis-driven Orient Capital business and our existing managed funds operations which have strong industry connections to investment managers and custodians,” he said.
“Combine that with our strong technical and innovation bent and our data analytics capabilities, and we will provide a very compelling proposition to the market-place. And we expect it to be well received.”
Apart from Mainstream BPO, which has accelerated its offshore expansion following its listing in 2015, other providers of various funds manager admin services include OneVue, which operates the largest outsource retail unit registry in Australia, and Fund Host, one of the oldest providers of admin and responsible entity services. Some other, larger, companies, such as Equity Trustees, specialise in RE and other such compliance-oriented services for managers.
Still, most retail managers do their own admin, which Gardiner said was likely to change over the next few years as they saw the benefits of outsourcing. These benefits include not only taking advantage of scale but also of being able to capitalise on technological advances which they otherwise would have been able to sign up to.
Gardiner said: “There is immense growth potential in the managed funds administration sector, and by combining the expertise of Link Fund Solutions with our cutting-edge technology, long-standing experience with share and unit registry services, and client management expertise we believe this presents a compelling proposition to the market-place.”
As part of the move, Link Fund Solutions will relocate to the Link Group offices in George Street, Sydney.
On the rebranding, co-founder of White Outsourcing, Andrew Harrison, who is staying on with Link as chief executive of Fund Solutions, said: “Our two businesses have always shared a focus on providing quality, outsourced solutions that harness the power of technology – and through the name-change we want to highlight to our clients this shared goal. “There is no doubt that demand for outsourced administration solutions is increasing, as funds must manage the increasingly complex Australian regulatory environment, and seek to tap into outsourcing as a mechanism to achieve operational efficiency and economies of scale whilst also empowering them to focus on core functions. Aligning more closely with Link Group means we will be better placed to meet this growing demand.”
Note: the author is a small shareholder in OneVue.
Greg Bright is publisher of Investor Strategy News (Australia)