Mitsubishi acquires Meridian as Island fund administrators join forces
Bermuda-based fund administrator Meridian Fund Services has been acquired by an Island-based subsidiary of Japanese banking giant Mitsubishi UFJ Trust and Banking Corporation.
The deal means Meridian, which has assets under administration of some $14 billion, will join Mitsubishi UFJ Fund Services (MUFG). The terms of the deal were not disclosed.
MUFG was formed seven months ago when its parent company acquired Bermuda-based Butterfield Fulcrum Group.
Meridian has 58 staff, of whom 19 are based in Bermuda, said Tom Davis, chairman of Meridian Holdings Ltd, Meridian Group's holding company.
Meridian started out in Bermuda as Meridian Corporate Services in 1996 and became Meridian Fund Services eight years later. Since then it has grown internationally.
Apart from its Bermuda office at 65 Front Street, Hamilton, Meridian has locations in New York, Cambridge (Massachusetts), Halifax and the Cayman Islands. The company services funds domiciled in jurisdictions including Bermuda, the US, the Cayman Islands and the British Virgin Islands.
MUFG has offices on Burnaby Street, Hamilton, as well as in the Cayman Islands, Dublin, London, Halifax, New York and Waterloo, Ontario.
The transaction with Mitsubishi is subject to regulatory approvals.
Mr Davis said changes in the funds world were making it more difficult for smaller administrators to thrive and this was a major reason that the deal made sense — for the company and its employees.
“The hedge fund world is becoming more and more institutionalised,” Mr Davis said. “They want to know who their service providers are, including the fund administrators. If they see a big name on the offer document that they use to make their investment, then it's easier for their due diligence team to tick the box, rather than when they see Meridian Fund Services and then they have to do some more research.
“The world is saying bigger is safer and you have to honour that trend. I wanted to make sure that our staff have got jobs for a long time to come and that our clients are served by a larger group.”
The deal would give Meridian's staff “a good chance to have a great future”, added Mr Davis, who has worked for more than 30 years in the industry and who will stay on in a consultant role after the merger goes through.
In 2012 Meridian was named Best North American Administrator by HedgeWeek and last year it was named Best Offshore Administrator by the same industry publication. Meridian was also ranked in the top three administrators in Hedge Funds Review's Service Provider Rankings in 2012.
In a statement, MUFG said the acquisition of Meridian would bring its assets under administration to approximately $165 billion, servicing over 300 clients and 1,000 funds.
The firm added that the deal was part of a wider growth strategy to build MUFG into a leader in the global investment services industry, both organically and through acquisitions.
Tim Calveley, deputy CEO of Mitsubishi UFJ Fund Services said: “As regulatory and investor pressures continue to rise, investment managers need a partner who has both a strong balance sheet and can provide a wide range of solutions to meet specific needs.
“With the backing of the fifth largest bank in the world by assets we are confident in our expanding capacity to deliver the global reach, range of service and security our clients require.”
MUFG provides services to hedge funds, fund of funds, private equity and real estate funds, mutual funds and family offices.
Mr Davis said the idea of the deal was hatched soon after Mitsubishi acquired Butterfield Fulcrum Group last October. MUFG's CEO Glenn Henderson suggested that Meridian could become his firm's first acquisition.
“We've known each other a long time and he knows our cultures are very similar,” Mr Davis said. “What I mean by that is we want to add value for our clients, not simply be a low-cost service provider. Bermuda is our headquarters and theirs, so it made sense.”
Recent years have seen major job cuts at other Bermuda fund administrators, including Citi Hedge Fund Services and Citco Fund Services relocate or cut jobs, in the interests of efficiency.
“When you look at what's been going on with other fund administration companies, there are a lot of good people in Bermuda,” Mr Davis said. “This could be a time of resurgence and for the Bermuda staff, it's excellent.
“This deal is good news for both firms and good news for Bermuda.”