The wonders of working for an admin boutique
As buyout fever hits the hedge fund administration space, should Irish workers opt for the behemoths or the boutiques?
Within hedge fund administration, the big investment banks are gobbling up the mid-sized players. "We are rapidly losing the middle ground," says Denise Valentine, author of US-based consultancy Aite Group's report on 'mega-merger mania'.
State Street this year acquired Investors Financial Services, a move that added 470 staff to make a total of 2,000 heads in its Irish operation - nearly a quarter of all fund admin jobs in the country. It also swelled its assets under administration to US$4.5bn.
Meanwhile, Citi has acquired Bisys, Mellon has been swallowed up by Bank of New York, Tranaut by JP Morgan, Olympia by CACEIS, and Northern Trust has taken over Barings' business.
The big boys confess to problems feeding their appetite for talent. Gavin Nangles, head of product development at State Street Ireland, says they're scouting staff from several sources: "We have looked at different points of the prospective employee market - the domestic fund services industry here as well as the international, insurance businesses, at people who are returning to work after a period of absence, and outside the country, in Poland, for example."
You might have thought that with the new big kids on the block, the smaller players would suffer. However, high fees from the large firms tend to price the smaller hedge funds out - leaving the US$50m to US$200m space open for the boutiques. As this comprises 60% to 80% of the market, there's plenty to be had.
Indeed, Custom House Administration, which employs 145 people in Dublin, has seen growth of 45% a year over the last six years.
Chairman Dermot Butler says there are advantages to working for a boutique: "If you join a smaller firm, it's liable to be a more exciting role because companies are expanding more rapidly and promotion opportunities are greater. The larger institutions' fees are pricing out the smaller funds, which means that we, as a small niche player, have a much bigger slice of the market than we had before."
Smaller players are popping up in Ireland. Quintillion - 25% funded by Bear Stearns - appeared in 2006. Apex Fund Services and Admiral Administration have started this year, and Fulcrum has expanded into Ireland after a US$57m cash injection from venture capitalist 3i. ABN LaSalle and Morgan Stanley have also gained a presence in Dublin.
Nangles confesses more money is to be had at the start-ups: "We've seen poaching from the smaller players. The experienced staff who have proved themselves are only going to move to a niche provider if they are prepared to pay."
