The past few weeks have certainly provided some major changes in our alternative asset management marketplace. First the news that Citigroup was leaving the Fund Administration business took many by surprise and is leaving those who are administered by Citi wondering who will be taking over their fund administration. Just when that news was being absorbed, the even more industry impactful story of SS&C acquiring Advent Software sent shockwaves throughout the Administrator and Hedge Fund industry.
While Citi Fund Services was certainly a major player, there are many reasonable alternatives for funds that do not want to risk the wait and see how Citi decides to sell or spin off that business. While selecting the right Third Party Admin (“TPA”) is one of the most important decisions a fund can make I will not focus this blog entry on that topic. See our website for more insights www.finservconsulting.com
Advent Geneva is probably the single largest software name in the alternative asset management industry. While Geneva owns the less than sexy back office portfolio accounting space, all CFO’s and COO’s know how core this application is to their businesses. SS&C has certainly had a mixed track record in terms of the quality of their software so there is certainly reason for Hedge Funds to be wary of this move. Most of the marketplace would probably be safe to assume that SS&C will not mess with Pete Hess and his team’s strong success so most funds are probably not panicking at this point.
The Third Party Admin space however should have several firms who have likely gone into full panic mode based on this news. At least one third to one half of the largest TPA’s are Advent Geneva customers and SS&C GlobeOp the Admin arm of SS&C now stands to gain a major competitive advantage for those TPA’s who will remain on Geneva. Only time will tell how that side of the transaction plays out but it is safe to say that SS&C GlobeOp will look to use this as a key selling point to gain market share.
For the TPA’s who do not use Geneva they now are looking at a much stronger competitor than they had just a week ago and they should expect that their clients who use Geneva will likely at least take a look at SS&C at some point in the future if their services do not meet expectations in the near future.
More to come on this major change in our industry…