Bank of NY Mellon launches fund admin platform

Bank of New York Mellon has launched a new enhanced fund administration platform—combining new technologies and outsourcing services—that the firm says addresses the need for improved corporate governance and accurate reporting from private equity funds.
The bank’s Alternative Investment Service supports investments such as buyouts, venture capital, mezzanine financing, real estate and hybrid hedge deals. It has a team of professionals based in Ireland, the UK, US and Hong Kong.
“Private equity has its own terminology, its own unique profile and characteristics for servicing requirements, and we believe we need a dedicated-type infrastructure and the expertise on the servicing side in order to truly support those clients most effectively,” said Rick Stanley, head of product management for the bank’s AIS division.
BNY Mellon’s private equity assets under management have increased in the last year to $7 billion. The bank is looking to become a top-five player in the industry over the next few years.
It is planning on capitalising on expectations that global private equity assets could increase to $5 trillion by 2015, while the outsourcing of administration services has a lot room for growth as only around 10 percent to 15 percent of firms currently outsource such operations.
The bank’s technology platform will deliver reporting capabilities through a secure web-based portal, covering operations such as fund set-up, capital calls and distributions and portfolio monitoring activities including account balances and performance. Such services are intended to help fund managers maintain their focus on investments rather than spending more time dealing with back office functions.
“The back office, the handling of capital calls and distributions, that whole process really does become quite a burden on the general partners,” said Alan Flanagan, head of product placement for BNY Mellon’s private equity services division. “If they can take away the burden of having to ensure that calls go out on a timely basis and funds arrive to fund their deals that’s a big weight off their shoulders.”
He added that technology administration platforms also require continual maintenance and upgrading, which can be quite expensive as well. The bank is seeing an increase in the number of interested private equity managers who have previously kept such operations in-house, including from North America.
“Europe is somewhat ahead of the curve in terms of outsourcing, but we are starting to see that creep into North America more,” he said. The bank is also looking to expand in Asia and establish an operating hub in Luxembourg and the Channel Islands, and expects middle-market deals and sovereign wealth funds to grow in importance in the near term.
In May the bank also strengthened its technology platform when it acquired the fund of hedge funds administrative services business of Dallas-based Lamp Technologies, an alternative investment administrator. “The importance of technology in today’s administrative environment is really becoming critical to effectively and efficiently service these private equity funds,” Flanagan said.
BKNY and its advisory firms, banks and trust companies manage nearly $70 billion in alternative assets, and hired former Citigroup executive Ted Berenblum in June to expand its investments in private equity, real estate and infrastructure.