Hufschmid to leave GlobeOp
SS&C acquired GlobeOp in May 2012 in a $920 million deal, of which Hufschmid stood to personally gain approximately $119.6 million. There had been widespread speculation Hufschmid would leave the company – something he all but confirmed in an interview with COO back in June. He told COO he would depart once he was confident the integration had gone smoothly. “Once I am satisfied that has been done, I will decide what to do next,” he said.
Bill Stone, chairman and CEO at SS&C, said Hufschmid would continue in a consultative role with the company until January 2013. The statement also added Rahul Kanwar, senior vice president and managing director, will assume overall responsibility for the SS&C GlobeOp business and would report to Norman Boulanger, president and COO at the firm.
One industry source said he had heard Hufschmid intended to re-enter academia, although this could not be confirmed. Hufschmid started his illustrious career on the fixed income and foreign exchange desks at Solomon Brothers, now part of Citigroup, before moving on to the ill-fated Long Term Capital Management (LTCM) hedge fund as principal. He established GlobeOp in 2000 following the spectacular collapse of LTCM. Industry figures have repeatedly acknowledged Hufschmid was a dominant and impressive figure within GlobeOp, and added his successor would have a lot to emulate.
An institutional investor, speaking earlier in the year, predicted senior management changes at the combined firm while adding that integrating the two systems would be a time consuming task and potentially disruptive to business. GlobeOp had endured a challenging year. The primary reason for its sale was because senior executives felt its share price was significantly undervalued. Moreover, the firm had a torrid 2011 losing one of its biggest clients BlueCrest Capital Management to HSBC Securities Services.
The SS&C-GlobeOp merger does have numerous positives though. It will create a fund administration behemoth servicing northwards of $300 billion in Assets under Administration (AuA) while it will enable SS&C to continue its expansion throughout Asia, having already acquired Thomson Reuters’ PORTIA business, which has staff in Bangalore, Hong Kong, Singapore, Tokyo, Dubai and Bangkok. Hufschmid, speaking in June, said he expected SS&C to continue on its acquisition spree.
Furthermore, it will enable GlobeOp, which traditionally works with hedge funds, to leverage SS&C’s skill-sets in other asset classes and work with banks, pension funds, mutual funds, corporate treasuries and insurance companies.
The SS&C-GlobeOp deal was the first of two major fund administration mergers this year. It was announced in July that State Street AIS would pay $550 million for Goldman Sachs Administration Services. The combined entity will collectively service $700 billion in hedge fund AuA, making it the world’s largest hedge fund administrator, leapfrogging previous incumbent Citco. There is speculation also that Morgan Stanley could be the next investment bank to shed its fund administration business.