05/01/2013

Butterfield Fulcrum Looks Ripe for Takeover

Fund administrator Butterfield Fulcrum is being eyed by a larger rival.

A “top 10” administrator has been given right of first refusal to purchase Butterfield, a Bermuda firm with $92.7 billion of assets under administration. Citco, State Street, SS&C Globeop and BNY Mellon are among the biggest players in the field. Butterfield is controlled by private equity firm BV Investment.

With only a few big players dominating the hedge fund-administration business, there’s constant pressure on small and mid-size shops to pursue mergers and acquisitions. Hedge Fund Alert’s Manager Database, which compiles information on SEC-registered fund operators and their service providers, shows eight firms with $100 billion or more under administration. Combined, they control 79% of the $3.9 trillion of hedge fund assets serviced by administrators. (The newsletter will publish its annual ranking of the top-25 fund administrators on May 8.)

There’s also been talk that HedgeServ, which has $55 billion under administration, is in play. But the firm insisted in a prepared statement that it intends to remain an independent service provider. “We have been winning business at the expense of many of our competitors. Our competitors have responded by spreading the rumor that we are about to be purchased.”

Butterfield Fulcrum formed in 2008 via the merger of Butterfield Fund Services and Fulcrum Group. In 2011, executives Glenn Henderson and Tim Calveley purchased the firm with backing from BV. Henderson, the firm’s chief executive, oversees a staff of 350.

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