Citi has identified the area of private equity fund servicing in Europe as one of key growth in the future, and will launch its Dublin-based European private equity fund servicing unit in the first quarter of 2008.
Ronan Daly, head of Alternative Investment Services, EMEA and Asia Pacific, Citi, said, ‘The team is one that is in the process of being formed. It will be opened up in the first quarter of 2008. Initially it will comprise a half dozen people, but we plan to follow a pretty aggressive business plan to build market share.’
Despite the relatively small starting number of figures, Citi has plans to grow this number ‘significantly’ in the coming years, said Daly. ‘This European business is not a start-up operation, it will be working on the back of the tremendous resources and knowledge that is already well-established in the US, where there are over 250 people involved in the private equity servicing department.’
‘If we go into an area, we want to be in the top two or three in that sector. We think this is a real opportunity to get in there with private equity fund servicing,’ he added.
Discussing the logic behind the decision to introduce the private equity fund servicing operation into Europe, Daly said, ‘We already have European-based clients who are being serviced out of the States. We see this as an opportunity to bring the system and procedures of the US business to Europe and Ireland. We will be introducing a new private equity model to Europe that has existed for 10 years in the US. Citi already has the number one private equity servicing business in north America.’
Daly also feels that there is now sufficient cross-over of investors between hedge funds and private equity funds to help the firm attract more and more clients to the new unit. He said, ‘There are a lot of similarities in the hedge fund servicing and the private equity servicing businesses, and a lot of our clients who have hedge funds also have private equity funds, so it is a logical step to make.’
He believes that the potential for growth in the private equity fund servicing sector is significant, and one that will last for up to 10 years. ‘We see private equity fund servicing as a growth area in both the short term and the long term. We believe that this sector will continue to grow in the next five to 10 years,’ he said. Daly’s comments are in accordance with the recent findings of the Deloitte second annual funds survey, where 40 per cent of respondents cited private equity funds as an area of growth in the future.
‘Hedge funds and mutual funds are now very well serviced, there is already lots of providers, especially in Dublin. Private equity is far less developed as an area, you won’t find as many providers of this service,’ said Daly.
Daly is confident that this business model will be a success in Europe. He said, ‘We have a precedent for transporting this model. We have done it once already this year, when we introduced the private equity servicing business into Asia earlier this year. The Asian business is headquartered in Hong Kong, and the business has experienced a tremendous start.’ |
