SS&C joins bid to take over GlobeOp
TPG Partners’ $802 million takeover bid of GlobeOp could be derailed following an announcement by SS&C Technologies that it too was conducting due diligence on the London Stock Exchange listed fund administrator.
In a statement, the US-based SS&C said it was considering its options which could include a “possible cash offer” and advised GlobeOp’s shareholders “to take no action at this time.” This announcement sent GlobeOp’s share price up nearly 8% to 465p on Monday.
The NASDAQ-listed SS&C, which has $223 billion in assets under administration (AuA) acquired the Dublin-based BDO Simpson Xavier Fund Administration Services in August 2011, in a bid to expand into Europe. “It is an interesting announcement by SS&C given that most of GlobeOp’s clients are based in the US. SS&C has repeatedly said it wants to bolster its operations in Europe so growth is clearly being identified elsewhere,” said Peter Hughes, CEO of Apex Fund Services.
Hughes added GlobeOp would be able to leverage SS&C’s technology if the deal materialised. “Given how bearish the markets are right now, the fact that we are seeing so many acquisitions taking place in the fund administration space suggests that the potential opportunities in this sector are clearly being noticed,” commented Hughes.
GlobeOp, which has $173 billion in AuA, put itself on the market as it felt its share value was significantly undervalued having plunged to below 300 pence from a 446 pence peak in March 2011. GlobeOp did not have a great 2011. During the summer, it was revealed BlueCrest Capital Management, the $26.8 billion hedge fund, was moving some of its fund administration business from GlobeOp to HSBC Securities Services prompting GlobeOp’s share price to decline by 9%.
There were several high profile takeovers in 2011. Wells Fargo acquired LaCrosse Fund while Northern Trust purchased Omnium from Citadel. However, the market has been very difficult for all fund administrators regardless of size. Last week, reports revealed HSBC was moving its US fund administration business to Ireland in a bid to control costs.
“It has been a tough environment for everyone to operate in - we have had four years of hard toil. Some of the biggest fund administration platforms at bulge bracket banks were established when times were good. However I predict it will be the specialist pure play administrators with the knowledge and technical expertise that are going to be in the best position to rationalise businesses and curb expenditure going forward,” added Hughes.
Written by Owen Dickson