Non-bank fund admin service debuts in China
Irish boutique fund administrator Apex Fund Services says it has launched the first private fund admin service in China and is helping the embryonic mainland market to develop.
"China has been closed off to the rest of the world in terms of fund administration," says Anthony D'Silva, Shanghai-based managing director for Apex China. "They have a very nascent understanding of the service."
Before being introduced to fund administration, he adds, many local managers did not know how to do various performance pay calculations and were using manual data input methods.
Apex has been training local fund managers and the China Insurance Regulatory Commission about the various fund services available.
The company so far has four fund admin mandates in China, with five more in the pipeline. D'Silva declined to reveal any names, but he did say the mandates covered a mixture of domestic renminbi and offshore US dollar funds for Chinese investors.
In addition to these domestic funds, the administrator provides services to one qualified foreign institutional investor fund and is talking with various qualified domestic institutional investor (QDII) funds. "We have met with all the big QDII managers," says D'Silva. "But there is still a learning curve for them on the benefits of fund administration."
From its Shanghai office, the administrator offers services including fund accounting, share registry, anti-money laundering and fund set-up assistance. It is targeting Chinese domestic and offshore funds and local investment managers and banks.
Apex says it is the first "private" administration provider in the country because it is not backed by either a bank or financial institution. The firm officially launched the services last week during an Irish trade mission to China and has been operating in the country since May 2008, when it incorporated a wholly owned foreign enterprise in Shanghai.
Since then, as well as researching how to do fund admin in China, the company has been working as a sub-consultant to a Rmb40 billion ($5.9 billion) state-owned fund-to-fund, says D'Silva.
Apex's Shanghai office currently employs four people, including D'Silva. Following the firm's global service model, all fund administration activities are conducted on the ground in China and not through a shared service centre.
The company has ambitious growth plans for Asia-Pacific. In addition to building up its Shanghai presence, Apex is evaluating opening an office in Australia. "We are closely studying whether we can bring value to the table," says D'Silva. "The Australian market is very competitive."
Apex has been in Asia since January 2008, when it simultaneously opened offices in Hong Kong and Singapore. The two offices administer between 50 and 60 funds and employ eight and 16 people respectively, says D'Silva. Next month the firm will be hiring two additional staff members in Hong Kong and one in Singapore.
The administrator says it is a "one-stop shop" for fund services. Best known for its alternative investment products, Apex can handle "any strategy or product", says D'Silva although it is best known in Asia for its structured credit services.
Apex currently provides services for 150 funds globally, totalling $8 billion in assets under administration.
China is an attractive market for service providers. Citing increased regional demand for custody and fund administration services, global custodian Brown Brothers Harriman opened an office in Beijing and hedge fund administrator Omnium an office in Hong Kong last month. At the opening, Omnium announced winning mandates from the new Senrigan Capital Management and KCIC Asia Gateway Fund hedge funds.