Apex launches cap intro service
Apex Fund Services has become the first fund administrator to launch a cap intro offering for its clients.
Apex Capital Introduction Services will be run by Leah Cox, a former vice-president at Deutsche Bank’s Alternative Fund Services business, and will help hedge funds, private equity vehicles, real-estate and long-only funds raise assets.
"This is a natural progression for us given the number of services we already offer our fund managers. We have a global presence and network and we hope to help our clients find investors," said Peter Hughes, group managing director at Apex Fund Services.
The cap intro offering will cost in addition to the fund administration, although Hughes emphasised it should be viewed more as an outsourced marketing service.
A number of prime brokers have shrunk their cap intro teams although their dominance is unlikely to be challenged by other providers.
Apex’s main client base is, however, smaller or launch hedge funds which might struggle to attract the attention of their primes’ cap intro teams. Nonetheless, one expert said he doubted other fund administrators would venture into this space, citing costs and the added level of regulatory oversight.
"A lot of the big banks will not pay attention to smaller hedge funds running less than $500 million, yet it is these managers which are producing genuine alpha," added Hughes.
This launch comes less than six months after Apex unveiled its Emerging Manager Incubation Services whereby it provided start-up hedge funds with free office facilities and fund incubation.
Margins are falling at hedge funds while operational and regulatory costs are mounting making it exceptionally difficult for start-ups. The challenge facing managers is evidenced in a 2012 Citi Prime Finance survey, which revealed hedge funds running less than $250 million spent approximately 198 basis points of their 2% management fee on operations and third party service personnel.