The Link Group has expanded into the funds management administration market with the purchase of White Outsourcing. And, probably of more interest to super funds, the big administrator is also about to cut its fees paid by former SuperPartners industry funds as it reaps the benefits of scale.
Announcing its half-yearly results last Friday, Link disclosed the White Outsourcing purchase over the Christmas period. John McMurtrie, Link’s managing director, signalled Friday that he wanted to build the funds management admin business, alongside Link’s managed funds unit registry.
“We think we can get it to a certain scale to make a decent return,” he said. “The problem with [managed funds administration] is that it is very difficult to get a standardised system. White Outsourcing was complementary for us… We were looking to get into the private markets.”
White Outsourcing, arguably the oldest managed funds admin businesses in Australia, was owned by the listed Steadfast Group since 2013, but before that was part of the old accounting firm of Moore Stephens, which dates back to the 1920s. The business is understood to have annual revenue of about $10 million.
The outsourced managed funds administration market in Australia is quite fragmented, with various companies, such as Link, providing aspects of the required services. Only one, Mainstream BPO, lays claim to providing all the outsourced services required of a boutique funds manager.
Mainstream BPO and its more diversified platform competitor, OneVue, both became successful listed companies in the past two years and have embarked on expansionary paths. Another long-time competitor in the space, FundHost, has remained privately held.
Meanwhile Link disclosed in its announcement to the ASX that it would be reducing the fees on the eight former SuperPartners client funds as of April 1. The fee reduction is about 3.5 per cent. The five clients which were also shareholders of SuperPartners have had their fees reduced since January. Link bought SuperPartners, its biggest competitor for industry fund admin, in 2015 and completed the transfer of accounts by the end of last year.
The company also disclosed last week that it had picked up a new super fund client, the Tasmanian Retirement Benefits Fund.
Group revenue in the six months to December was up 1 per cent to $396 million but earnings (EBITDA) were up 20 per cent to $108 million, reflecting the benefits of the increased scale.