3i Makes $57 Million Investment In Hedge Fund Administrator

Jun 29 2007 | 8:58am ET

Private equity firm 3i Growth Capital is building up its financial services portfolio with a $57 million investment in Fulcrum, a global hedge fund administrator. Terms of the deal were not disclosed.

3i’s investment will fund business growth and provide liquidity to shareholders, allowing Fulcrum to retain its status as an independent administrator, according to Whitney Bower, a 3i partner.

"We believe that Fulcrum’s growth potential is dramatic and we would like to see continued growth geographically in Europe and ultimately into Asia," said Bower, who declined to comment on 3i’s equity stake in Fulcrum.

"We’d like to expand our operational capability and through Akshaya Bhargava, who is going to join the business, we will expand our operations in Asia. We will continue to look into product line expansion into the middle office providing a full set of services to our clients."

Bhargava, currently of 3i, will become Fulcrum’s CEO, replacing Glenn Henderson, who will become chief sales officer in an expanded business development/sales role.

"We’ve won some very large blue chip hedge funds based on referrals from other clients so what we intend to do is scale this business with that quality in mind," said Henderson. "I’m definitely a selling CEO and I’ll be heading up our business development effort."

Prior to the deal, Henderson said that Fulcrum was not actively pursuing a buyer and entered into the transaction because "it was a good fit at the right time." He emphasized that Fulcrum will remain independent, unlike other administrators such as BISYS and Investors Bankers’ Trust, which have been absorbed by Citi and State Street, respectively.

Bower said 3i looked at well north of a dozen businesses in its valuation of hedge fund administrators and settled on Fulcrum because "it’s a mid-sized business with a fantastic combination of technology and skilled personnel."

Going forward, Bower said that while 3i would consider other opportunities within the hedge fund space, the firm "feels very comfortable" with its acquisition and doesn’t see the need for additional acquisitions.


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