War brewing in the managed fund admin space

0

by Greg Bright

Andy Harrison, the chief executive of Link Fund Solutions, formerly known as White Outsourcing, has left the company. The move could spark a major disruption of the fund admin part of the industry.

Harrison joined the former White Outsourcing in 2002 and was an integral part in building the firm into a major player in the fund admin space. He was one of the shareholders who sold the firm into the listed insurance broker Steadfast in 2013. He then remained at the helm when that company sold the business to Link Group in late 2016.

No-one, including him, wanted to comment on his departure late last week. But the fund admin world is a small one. The consensus view seems to be that Link Group may well hit back and buy one of the other players, or at least hire away a key person to solve its current issue.

After the White Outsourcing purchase, which represented a diversification for Link, its chief executive, John McMurtrie, said he wanted to see the business grow into a scalable entity. Link is really good at providing admin services for large volumes of transactions and clients.

The independent fund admin market in Australia, which handles more than $500 billion of retail investment money, is split between fee-for-service high-volume players and boutique high-value-add players, as it is overseas. Australia’s fund administrators and member and investment software providers have a good track record in expanding overseas, especially in the UK.

The three largest players in Australia, which are all fee-for-service, are ASX listed. They are Mainstream, which has been on an offshore acquisition trail for the past two years, OneVue, which is more diversified, but Australia-centric, and Link Fund Solutions, owned by an admin powerhouse.

(Perpetual Trustees and Equity Trustees also offer some admin services for listed investment entities.)

The main independent player which offers a different, basis points-orientated, fee structure is FundHost, which is privately held. However, FundHost recently agreed to a fee-for-service arrangement to win the relaunch of CLFund (see separate report this edition).

There are also specialist alternative admin companies such as the global Citco and the local Custom House and APEX.

Link last year paid about A$1.5 billion for the UK-based managed fund administrator formerly known as Capita Group, which gives the firm not only a larger global presence but also greater IP in fund manager admin.

One gets the feeling that a war is brewing.

Meanwhile, Ross Bowden, the chief executive of Link Advice, which was arguably Australia’s first scalable advice business – set up in the 1990s to provide low-cost advice to industry fund members – will leave the firm in June after seven years at the helm.

As reported elsewhere last week, Link is to amalgamate Link Advice with Adviser Network. The merged business will be run by Duncan McPherson, who has headed up Adviser Network since last June.

 

Share.