Fund Administration: The Impact Of Consolidation

Commentators to the hedge fund industry agree that the fund administration landscape has been altered significantly by the mergers and acquisitions activity of the last few years. The consolidation of larger institutional services providers in this space, along with the exit of some smaller administration shops, has naturally flowed through to impact the industry in the Cayman Islands.

Recent notable consolidations include SS&C Technologies' acquisition of Citigroup's Alternative Investor Services hedge fund and private equity offerings and the agreement by UBS to sell its administration business, including the UBS operation in the Cayman Islands, to Mitsubishi UFG.

These transactions appear at one end of the spectrum, where large institutions have been driven to shed their administration businesses, most likely due to increased regulation and a seismic shift in the risks and cost effectiveness of running such services. In addition to these changes, some mid-cap