Q&A: Maples Fund Services Says Investors Demand Greater Transparency, More Reporting

Dec 9 2010 | 4:36pm ET

Maples Fund Services, formerly known as Maples Finance, recently rebranded itself and took steps to expand its service offerings. The firm is just one of many hedge fund service providers that is being forced to adapt to the new, tougher demands of its clients who want greater transparency, flexible reporting and scalable services.

FINalternatives recently spoke with Scott Somerville, CEO of Maples Fund Services, about how that company—and the fund administration business in general—has been evolving to meet both investors' and fund managers' needs.

How have you evolved, how is the company now positioned?

Over the past eighteen months, we have committed a significant amount of resources to Maples Fund Services, building out a best-of- breed  operational infrastructure and technology platform, re-organizing our executive team, including adding dedicated business development resources in the US, Europe and Asia, and ensuring a global platform to offer a customizable service offering.

Why the new brand and what does this mean for the company?

Our new brand reflects our  position as a fully outsourced fund services provider. We determined that we needed a new brand and identity as we move to the next evolution of Maples Fund Services, formerly operating as Maples Finance.  The announcement is part of the global restructuring of the Maples Finance business, which now operates as MaplesFS, with various business divisions including Maples Fund Services.

How are you differentiated against competitors, how are client and service models different?

We have demonstrated a commitment to an adaptable operating model since our inception. Our differentiating edge at Maples Fund Services is our high degree of professionalism, commitment to a valued client partnership philosophy, combined with a global operational model that is adaptable to each client’s specific needs.

We have an experienced team, flexibility in our technology and platform, the ability to do bespoke development, and we can customize our operational and technology platform. Historically, few fund administrators have being willing to provide this level of flexibility, nor were they willing to consider mandates that fell below a certain size of AUA or minimum fee base.   At Maples Fund Services we look at the merits of each relationship separately, and sign on with each client as a long term operational partnership.

Where is Maples Fund Service’s client focus? Has that changed in the past two years? What is the focus moving forward?

As an operational partner, we are going beyond traditional fund administration relationships.  We are now supporting a much broader client base, particularly the institutional allocators, such as pension funds.   Our focus is to provide operational solutions to our clients, across the range of front, middle and back office services.

What are asset managers and institutional investors demanding that is new?

A lot of the forces of change have been investor driven. Institutional investors are now very proactive and involved in assessing the operational infrastructure and value proposition being provided by the service providers to the funds in which they invest. We are seeing a lot more on-site due diligence and regularly interact with consultants representing this investor base. There is significant demand for different types, frequency and level of reporting being provided by managers to  investors, which then filters into the manager’s expectations of the level of transparency and robustness in systems used by the service provider. All of these demands are driving change for the fund service providers. We are certainly seeing that first hand in the demands on our services and the customized reporting required by both managers and investors.

What services are most in demand right now (risk management, accounting, platform integration)?

A partnership model and philosophy and the extension of traditional services. Historically middle office functions and risk were performed in-house by investment managers.  Now, with costs a real concern and the landscape for start-ups very competitive, managers are seeking an operational partnership with their fund services provider to provide as many services across the front to back office to alleviate costs. What was historically, five years ago, a viable business model for fund administrators, such as focusing exclusively on determining NAVs, is certainly not the case anymore.

Do you expect to see consolidation in the hedge fund admin space? Any plans for growth by acquisition?

Since Maples Fund Services was established, our growth has been organic.  Our private status and ability to act independently allows us to deliver against the necessary market changes to become a fully outsourced solutions provider and meet the demands of the marketplace. We plan to continue to invest significant capital and resources to our operational infrastructure and technology, and will be able to do so through our ownership structure as part of the Maples Group. We don’t plan to make any acquisitions in the short term.

We do see potential consolidation in the industry, but also a lot of opportunity for fund services providers that are well positioned.

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