BNY Mellon to attain full ownership of HedgeMark
BNY Mellon is to acquire the remaining 65% ownership stake in HedgeMark, the managed accounts platform.
Andrew Lapkin, president at HedgeMark is to be named CEO, replacing founder Ken Phillips who will retire. Lapkin will supervise the transition and reports to Samir Pandiri, BNY Mellon executive vice president and CEO of Asset Servicing.
Financial terms of the transaction were not disclosed and the deal is expected to close in the second quarter subject to regulatory approval. BNY Mellon has held a 35% interest in HedgeMark since 2011.
Institutional investor interest in managed accounts has grown since the final crisis. Many allocators cite the improved liquidity, transparency, superior levels of governance and diminished co-investor risk as being the key selling points of managed account platforms.
However, some point out that uptake of managed accounts has been muted. Research conducted by Moody’s Investor Services in 2010 when excitement about managed account platforms was at its peak, revealed just 2% of total hedge fund assets or $41 billion at the time was held by the top 10 managed accounts providers.
Recent surveys by J.P. Morgan’s Capital Introductions Group and Goldman Sachs’ Prime Brokerage Group estimate one third of investors allocated into managed accounts. Deutsche Bank Markets Prime Finance’s 2013 Alternative Investment Survey (AIS) puts that number at 44 %, adding 29 % of investors will increasingly use managed accounts over the next 12 months.
Despite Deutsche Bank’s optimism, it is tempered with caution. “The use of managed accounts has been fairly stable over the past few years with the number of investors allocating by this method hovering around the 40 per-cent mark since we first asked this question in 2011,” read the Deutsche Bank survey.