Fund Admin Acquisitions Near Record Pace with Apex Deal

It’s full speed ahead for mergers and acquisitions activity in the alts fund administration space with Apex Group making the latest move, acquiring Custom House during a busy summer period that has 2018 already outpacing 2017 in the level of activity.

The Custom House acquisition – announced Monday and set to close at end of the fourth quarter – adds $24 billion in assets under administration, bringing Apex Group to $560 billion in assets under administration. Apex announced the deal along with its private equity backer, Genstar Capital, but did not disclose the terms of the deal. The Custom House acquisition adds to Apex’s hedge fund service arm, with both firms sharing “common hedge fund technology platforms,” according to a press release.

The deal, which increases Apex’s geographical footprint in Europe, Asia, and the U.S., will have Custom House CFO Helen Breen and COO David Barry remain with the firm but CEO Mark Hedderman leave, says Rosie Guest, global marketing director at Apex.

Apex is expecting to make another few acquisitions this year and into the first quarter of 2019, with two deals currently in negotiations, Guest says. “The target over the next five years is to break the trillion [dollar] mark,” she says.

The rate of acquisitions is likely to make 2018 one of the busiest years on record, with 11 transactions already clocked this year compared to 10 during 2017, according to a list tallied by Fund Recs, a cloud-based reconciliation software firm that works with fund adminstrators. That total list includes acquisitions of technology firms, but even the pace of acquiring fund administration players alone is up, with eight deals so far this year.

“The numbers are up more year to date than we have seen last year. One big trend is the technology side of it,” says Alan Meaney, CEO of Fund Recs, noting that technology deals have totaled $9.45 billion in value so far in 2018.

Apex’s latest move comes as the firm aims to become the largest independent fund administrator in the world. The firm has been on an acquisition spree, announcing in June its acquisition of private equity administrator Ipes, in January its acquisition of M.M. Warburg & Co.’s asset management and servicing business in Luxembourg, and in October 2017 its acquisition of Deutsche Bank’s alternative fund services business, as reported. The firm also added to its U.S. team with additional hires announced in July.

Other administrators are also making moves, both acquiring fund admin peers as well as technology companies. SS&C Technologies announced its acquisition of the North American business of CACEIS, aCrédit Agricole division in March, as well as several technology deals, including Eze Software in July and tech and business operations provider DST Systems in January. State Street acquired Charles River Development, a provider of investment management front office tools, in July.

It’s a positive buyer’s market in the fund administration space, with many firms looking to build up a U.S. presence or increase their private equity capabilities, says Bill Salus, CEO of Paddock Consultancy, which focuses on the fund administration market.

“I think [consolidation] is going to continue at all points in the market,” he says. “Large admins, medium sized admins, and smaller… There continues to be a proliferation in admin firms coming to market. And while the overall market is growing, and there’s even more of a trend to outsourcing more of a manager’s middle and back office, the service providers struggle to keep up with that technology trend – and either face lower growth or don’t have enough scale to plow back into R&D and technology.”

And while summer has traditionally been a quieter period, there are more deals coming, Meaney says.

“I think it’s worth keeping an eye out for a couple more big deals to be done by the end of the year,” he says.

Contact the reporter on this story at or 212-542-1278.