Exploring investment potential in the booming fund administration and corporate services sector
We caught up with Stuart Skinner, Julian Cater and Will Wickham, of the Deutsche Numis Investment Banking team to take a deeper dive into the opportunities within fund administration and corporate services.
What’s driving the rapid growth of the fund administration and corporate services sector?
The sector is experiencing a surge due to several interesting drivers: rising regulatory complexity, increasing investor disclosure demands and pressure on firms’ margins, to name just a few. As a result, many investment managers and companies are outsourcing administrative services that were once handled in-house.
This trend spans fund administrators supporting asset managers, corporate services helping firms expand internationally, and providers managing ultra-high-net-worth family wealth, particularly as these investors explore alternative asset classes. These services are crucial, technically complex and increasingly benefit from external expertise.
"Private equity activity in the sector remains elevated and we expect IPOs will increasingly become a viable exit option as companies continue to scale”.
Why is private equity (PE) showing such a strong interest in this space?
The sector’s strong growth, high margins and good cash generation, coupled with its fragmentation, make it an ideal candidate for consolidation – an attractive opportunity for private equity. PE-backed platforms are already driving significant M&A activity, and we expect that demand to continue.
PE firms see an opportunity to back platforms that can scale rapidly through M&A and transform traditionally people-based businesses with technology. Digitalisation and AI, in particular, promise to streamline operations and enhance efficiency, which makes these businesses even more attractive from a returns perspective.
At the same time, many companies in the space are reaching sizes where IPOs become viable, which could lead to increased public market engagement. These companies also possess financial characteristics that are attractive to public market investors, which could accelerate a shift towards public listings.
How is Deutsche Numis positioned in the landscape?
This is a sector where we are really able to shine. Together with the wider team at Deutsche Bank, we’re exceptionally well placed, due to our deep connectivity across the fund administration and corporate services industry and our strong relationships with private equity. We have advised on a number of the most high-profile transactions in the sector and remain active across the upcoming pipeline of deals.
Together we recently hosted a landmark conference, dedicated to the sector, that brought together an unprecedented number of corporates and investors – a first at such a scale. Our ability to convene the right players from both sides of the capital-raising ecosystem is a testament to our strong relationships and leadership in the space. As part of Deutsche Bank, we offer unparalleled reach and advisory capabilities to clients navigating this fast-changing market.
What makes this sector important going forward?
Fund administration and corporate services are foundational to the functioning of modern finance. It’s an area that’s historically been overlooked and has now become extremely exciting.
As funds and corporates grow to be more global and more complex, their need for expert, outsourced support scales significantly. With regulation set to increase, and at the same time become more localised, the value of these services – and the investment opportunities they present – is only going up.
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We caught up with Stuart Skinner, Julian Cater and Will Wickham, of the Deutsche Numis Investment Banking team to take a deeper dive into the opportunities within fund administration and corporate services.
What’s driving the rapid growth of the fund administration and corporate services sector?
The sector is experiencing a surge due to several interesting drivers: rising regulatory complexity, increasing investor disclosure demands and pressure on firms’ margins, to name just a few. As a result, many investment managers and companies are outsourcing administrative services that were once handled in-house.
This trend spans fund administrators supporting asset managers, corporate services helping firms expand internationally, and providers managing ultra-high-net-worth family wealth, particularly as these investors explore alternative asset classes. These services are crucial, technically complex and increasingly benefit from external expertise.
Why is private equity (PE) showing such a strong interest in this space?
The sector’s strong growth, high margins and good cash generation, coupled with its fragmentation, make it an ideal candidate for consolidation – an attractive opportunity for private equity. PE-backed platforms are already driving significant M&A activity, and we expect that demand to continue.
PE firms see an opportunity to back platforms that can scale rapidly through M&A and transform traditionally people-based businesses with technology. Digitalisation and AI, in particular, promise to streamline operations and enhance efficiency, which makes these businesses even more attractive from a returns perspective.
At the same time, many companies in the space are reaching sizes where IPOs become viable, which could lead to increased public market engagement. These companies also possess financial characteristics that are attractive to public market investors, which could accelerate a shift towards public listings.
How is Deutsche Numis positioned in the landscape?
This is a sector where we are really able to shine. Together with the wider team at Deutsche Bank, we’re exceptionally well placed, due to our deep connectivity across the fund administration and corporate services industry and our strong relationships with private equity. We have advised on a number of the most high-profile transactions in the sector and remain active across the upcoming pipeline of deals.
Together we recently hosted a landmark conference, dedicated to the sector, that brought together an unprecedented number of corporates and investors – a first at such a scale. Our ability to convene the right players from both sides of the capital-raising ecosystem is a testament to our strong relationships and leadership in the space. As part of Deutsche Bank, we offer unparalleled reach and advisory capabilities to clients navigating this fast-changing market.
What makes this sector important going forward?
Fund administration and corporate services are foundational to the functioning of modern finance. It’s an area that’s historically been overlooked and has now become extremely exciting.
As funds and corporates grow to be more global and more complex, their need for expert, outsourced support scales significantly. With regulation set to increase, and at the same time become more localised, the value of these services – and the investment opportunities they present – is only going up.