Worries over asset custody are the biggest deterrent for institutional investors and wealth managers sceptical about the crypto and digital assets sector, according to new global research by London-based Nickel Digital Asset Management.

Nickel’s study with institutional investors and wealth managers in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates, who collectively manage over USD800 billion in assets, found custody is a bigger issue than volatility.

They were asked to rank six barriers to investing in digital assets and rated the lack of a centralised authority as the third biggest barrier followed by ESG issues and the risk of market manipulation. Uncertainty over the regulatory environment was rated sixth and least important.

Almost all (97 per cent) questioned say the backing of a major traditional financial institution is important before they consider investing in any digital asset fund or investment vehicle. For 44 per cent it is very important, the study found.

Recent volatility is also helping encourage sceptics to invest – the research found nearly one in five (19 per cent) strongly agree that price dislocations have presented strong opportunities to invest for the first time or increase allocations with another 76 per cent slightly agreeing.

Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, says: “The industry has achieved significant progress in mitigating custody and counterparty risks through the adoption of off-exchange settlement solutions (an advanced form of digital asset custody) over the past couple of years, however, this knowledge appears to be limited outside of the ‘digital native’ community.”

“Close involvement and broad support by large traditional financial institutions is clearly an important factor for many investors, which makes increased involvement of BlackRock and Fidelity a very welcomed move.”

The firm writes that the transaction will see over 600 experienced professionals join the business and significantly expand Waystone’s presence in existing and new territories, including India. The firm says that with the addition of LFS’s UK ACD, Irish ManCo, Fund Administration and TA businesses, Waystone has broadened its comprehensive and global suite of services and bolstered its ability to provide clients and investors with best-in-class governance and oversight.

All of the existing LFS UK investment managers and sponsors have transferred to the Waystone Group, demonstrating clients’ confidence in the combined business post-merger. Along with the KB Associates corporate merger which finalised in late September, Waystone is now supporting asset managers with more than USD2 trillion in AUM.

The announcement follows the news that Waystone has appointed a new Global CEO, Sanjiv Sawhney. Sanjiv will join Waystone from Citi, where he led global and regional Investor Services teams for the last 15 years.

Nancy Lewis, Interim Executive Chair, says: “After months of hard work from both teams and multiple regulatory bodies, we are delighted to welcome all LFS staff to the Waystone family. This is the start of a new chapter for both businesses, building a stronger platform – with further international expertise and capability – to service our current and future clients.”

Karl Midl, CEO of Link Fund Solutions, says: “This is an exciting moment for the team and our clients. Together, we will be able to provide current and new sponsors, clients and investment managers with a more comprehensive set of services to support their, and their investors’, needs as they continue to evolve and grow.”

Apex writes that IPFMG is an established ManCo, which has operated unit trust funds in Guernsey for more than 15 years. The IPFMG management team has extensive experience in collective investment scheme management, in multiple jurisdictions.

The firm writes that the acquisition of IPFMG further strengthens Apex Group’s ManCo offering in the Guernsey market, adding assets under administration of USD200 million, across eight funds and six fund managers. As part of Apex Group, IPFMG’s clients will benefit from the simplicity and efficiency of a single relationship with a global service partner across the full value chain of their business; including additional digital banking, depositary and custody solutions.

Apex Group’s existing ManCo services, delivered under the FundRock brands, look after more than 1,200 funds with a total of EUR234 billion in assets under management in 12 countries including Guernsey, Luxembourg and Ireland, to streamline their operations in a cost-effective manner.

FundRock’s existing Guernsey business offers fund management services including AIFMD and UCITS solutions for advisers and boards, together with principal management, risk management and support services for fund managers seeking to market funds on a cross-border basis. With a strong track record, FundRock Guernsey currently acts as manager to a number of funds with over USD8 billion under management.

This is the latest in a series of strategic global acquisitions for Apex Group to further grow its ManCo offering, including the recently announced additions of the ManCo businesses of MJ Hudson in Luxembourg and Ireland, Boutique Collective Investments in South Africa and Maitland in Luxembourg.

Peter Hughes, Founder and CEO of Apex Group comments: “With significant substance and technology capabilities, Apex Group offers the right platform for IPFMG to continue supporting clients by delivering resource and cost efficiencies and to meet their resourcing requirements in a complex regulatory environment. With the addition of the IPFMG ManCo business in Guernsey, we are proud to further consolidate our position as one of the largest super ManCo providers in Europe, offering scalable, cross-border solutions to clients.”

Brett Paton, Director, IP Fund Managers Guernsey adds: “As part of Apex Group and FundRock, our clients will be able to further streamline their operations in a cost-effective manner with third-party ManCo services complemented with fund distribution and administration, middle office, banking, depositary and custody services all available under one roof.”

The planned acquisition of IPMG is subject to regulatory approval and customary closing conditions, expected later in 2023. Financial terms of the transaction are not disclosed.

Grant Thornton acted as financial adviser to Apex Group, with Walkers providing legal counsel.

The firm writes that this transaction is a major milestone for both companies. “Waystone’s goal is to work with investment managers and fund sponsors to build and support fund structures, and to protect the interest of fund investors. Today’s acquisition will boost Waystone’s ability to service a broader pool of investment managers and sponsors, and bring a greater number of products and services to them,” the firm says.

The acquisition, which follows Waystone’s acquisition of T. Bailey Fund Services in 2022, will further strengthen Waystone’s presence in the UK. The firm writes that it will also broaden Waystone’s UK offering to include transfer agency and alternative administration. In addition, it further expands the Group’s administration offering following its acquisition of Centaur Fund Administration in January 2023, together with a further strengthening of the Group’s Irish Management Company (“ManCo”) offering following the acquisition of KB Associates in 2022. It will also add over USD190 billion in assets under oversight and administration, and see 600 staff globally join Waystone, including the establishment of the Group’s first office in India where it will now have around 150 employees. 

The firm writes that by coming together with Waystone, the sponsors, investment managers and their underlying investors will benefit from a stable and sustainable foundation as Waystone continues to grow in Ireland, the UK and beyond, providing the opportunity to grow existing funds, launch new products and better serve their investors and the wider investment community.

Rachel Wheeler, CEO Global Management Company Solutions for Waystone, says: “We believe that Waystone is uniquely positioned to take LFS forward, providing quality global solutions to support its fund sponsors, investment managers and their underlying investors. We look forward to fully supporting the LFS team and enabling them to focus on continuing to provide exceptional service.”

Karl Midl, CEO of LFS, adds: “We are delighted to be joining Waystone who are well known as a leading European fund services provider in our industry. The diversity of our client base requires significant investment in product enhancement – joining Waystone will allow us to further develop and expand our offering and invest in supporting our clients’ needs as they too continue to evolve and grow.  We look forward to working with Waystone to continue to build the confidence of asset managers, asset owners and investors in the fund market.”

Nancy Lewis, Executive Chairman, Waystone says: “The LFS acquisition further underscores Waystone’s strategic ambition of becoming the global leader in asset servicing. With our dual strategy of external and organic growth, driven by strong leadership and senior management, we will continue to expand our reach and deepen the quality of services we offer worldwide. We’d like to thank the teams involved at LFS, Waystone, the relevant Regulators, and all the other partners that have worked to successfully achieve this outcome.”

In operation since 2013, GFM and the Property Investment Management team provide tailored fund solutions to Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS), as well as property investment management services.  GFM is a regulated AIFM and UCITS management company (“ManCo”) with extensive experience in managing funds for institutional clients. 

The firm writes that the acquisition represents a strategic step in its expansion in the Irish market, allowing TMF Group to continue to build a high quality, fast-growing funds business.  As a result, TMF Group will now administer more than USD225 billion worth of assets on behalf of its global fund manager client base.

On announcing this acquisition, TMF Group Head of EMEA Frank Welman says: “We’re delighted to welcome GFM, its employees and clients to TMF Group. GFM is a well-established Super ManCo, regulated in Ireland and licensed to operate various alternative asset classes as well as liquid funds which will enable TMF Group to become a one-stop shop for our fund clients. GFM’s experience in offering top level alternative investment services, spanning from real estate to retail funds, represents a huge step forward for our fast-growing global fund services operation.”

Daniel Max, Head of Global Solutions at TMF Group, says: “The acquisition is a fundamental part of a continuing growth story for TMF Group and a strategic intent to develop and grow its global fund services business. GFM adds high quality funds capability to TMF Group’s portfolio of services in Ireland, helping it to increase its share of this growing market. This deal is part of TMF Group’s drive to further grow its fund services business and the deal follows a successful series of acquisitions by TMF Group in Luxembourg (Selectra), in Brazil in 2022 (Paraty Capital) and in the United States (VBO in 2021 and PartnersAdmin in 2023).

GFM Chief Executive, Phelim Keogan, says: “GFM is extremely proud of the company we’ve built over the past 10 years and the strong customer franchise we have established. Our highly experienced fund management team is excited to join such a global, trusted leader in the professional services industry, affording us the opportunity to rapidly grow our market profile and enhance our customer offering.”

For this transaction, the sellers were advised by Goodbody Corporate Finance (M&A) and Arthur Cox (legal). TMF Group was advised by Simmons & Simmons (legal) and EY (Finance & Tax)

The integration of 3D’s platform into Fund Channel marketplace will support asset managers and intermediaries on leveraging their distribution oversight by conducting due diligence on distributors and institutional fund houses around the globe.

Fund Channel’s asset managers will be able to leverage 3D’s platform, to ensure a fully compliant process together with an automated collection of documentation thanks to a client-friendly due diligence questionnaire. Distributors will only need to complete the questionnaire once for their entire network of asset managers as it includes all regulatory expectations.

Through this collaboration, asset managers comply easily with regulatory obligations and reduce time-consuming processes. In addition, Fund Channel experts evaluate the replies and provide an assessment proposal to the asset managers. The platform also allows asset managers to follow statuses, download reports as well as eliminate operational challenges and manual processes as well as benefit from the expertise in the fund distribution industry in data and risk analyses.

Régis Veillet, Head of Business Development at Fund Channel, says: “The 3D tool is a user-friendly platform and multi-lingual support team that make it easy and quick for distributors to respond to due diligence requests. Our clients can meet their regulatory obligations on time and have the audit and reporting tools requirements needed.”
 
3D co-founder Fabian Richter adds: “The combined service reduces the administrative workload for Fund Channel’s clients by over 90 per cent for both the collection and the review of distributor due diligence responses – something no other platform in the market can currently offer. We are hitting the ground running: a leading European Asset Management will start onboarding, with a number of others just a few steps behind. Watch this space!”

USGO is structured as a qualified opportunity fund to provide its investors the potential tax benefits of opportunity zone legislation, while also promoting economic development in challenged communities. Unlike other gold funds, which typically store gold overseas, USGO warehouses store theirs in secure facilities located in opportunity zones in the US, and its service providers are also based in Opportunity Zones. 
 
USGO also aims to provide institutional investors fee-based consulting services concerning their acquisition, ownership and disposition of physical gold bullion, as well as a comprehensive set of bespoke services to investment managers that intend to use gold bullion as collateral for acquiring futures contracts or other financial instruments.
 
Through their partnership with Apex, USGO will benefit from the flexibility, responsiveness and expertise provided by Apex’s team and underpinned by a range of ‘best in class’ technologies, a connected approach that supports all asset classes and regions through the secure transfer of data, across the entire value chain.
 
Apex’s fund administration services are the foundation of its single-source solution and ensure the delivery of timely, accurate and independent portfolio accounting, fund and investor reporting.
 
Chris Koons, Head of Mutual Fund Services at Apex Group comments: “US Gold Opportunity Fund is truly unique in their Opportunity Zone-driven strategy for gold bullion investing and storage, and we’re excited to support them as they continue to innovate and grow. By leveraging our team’s experience and our single-source fund administration services and platform, USGO will be positioned to provide its clients with more precise, transparent information whilst streamlining their operations.”
 
Bob Enck, President and Chief Executive Officer at US Gold Opportunity Fund, adds: “We are excited to appoint Apex as our independent fund administrator not only because their Portland, ME, office sits within an Opportunity Zone, but also because it is clear that they share our commitment to making a social impact and support our vision to fuel economic development in economically challenged communities. We have been particularly impressed by the responsiveness of their client service model and expertise of the team. We look forward to working together and the resulting efficiencies which will benefit the fund as we continue to scale”.
 

The Food Securities Fund provides working capital loans to sustainable agriculture companies in emerging and developing markets, with an initial focus on Sub Saharan Africa. The Fund addresses the gap in season-long loans for agriculture production in emerging markets, contributing to the UN Sustainable Development Goals (SDGs) by promoting climate smart agriculture and responsible, deforestation-free supply chains. It counts on a guarantee from the United States International Development Finance Corporation (DFC), supported by USAID’s Bureau for Resilience and Food Security, and support from the Good Energies Foundation, Convergence, Conservation International, WWF USA, and the Global Environment Facility, among other funders and backers.
 
The Food Securities Fund has been developed by Clarmondial with input from leading institutional investors, agribusinesses, and conservation organisations. It combines an innovative private debt investment strategy with a regulated fund structure in Luxembourg that offers quarterly liquidity and aims to deliver change at scale. The Fund is classified under article 9 of the Sustainable Finance Disclosure Rule (SFDR). The Fund started operations and concluded its first investment in March 2021.
 
Citi acts as the Fund’s Central Administration Agent and Depository. This work builds on Citi’s longstanding leadership and innovation in Environmental, Social and Governance (ESG) activities. Since 2005, through a specialist team dedicated to social and inclusive finance, Citi has developed solutions that enable its clients and partners to expand access to financial services and advance economic progress in underserved market segments across the globe. Adding to this momentum, earlier this year Citi announced a USD$1 trillion commitment to sustainable finance by 2030.
 
Jonas Bossau, Director, Citi, says: “As a global bank with a mission to enable economic growth and progress, we are committed to driving inclusive, social and sustainable finance solutions. The Food Securities Fund is a fabulous opportunity to harness the power of prominent investors and targeted investments to build on our track record of catalyzing social and inclusive finance and to help drive food security in developing markets around the world”.
 
Vistra Fund Management’s AIFM ManCo services and proven track record of helping funds across the world was key to enabling the regulated fund structure setup in Luxembourg. Vistra Group, a leading provider of expert advisory and specialized fund administration services to Alternative Funds, Corporate, Capital Markets and Private Wealth clients, was delighted to seal the partnership with Clarmondial and Citi. Vistra works with a number of the leading Private Equity and not-for-profit investment funds around the world. Vistra’s capabilities enable investment organizations around the world to grow, manage, structure and transact their investment opportunities with a range of industry leading services.
 
Jan Vanhoutte, Managing Director & Conducting Officer of Vistra Fund Management, adds: “Combining our proven track record in managing alternative investment funds and our expertise in interpretation and implementation of SFDR was key in helping Food Securities Fund deal with their regulatory requirements. We’re delighted that Vistra has been able to provide these essential services so that Clarmondial can focus their efforts on originating and executing the best investments to foster sustainable agriculture supply chains and catalyse environmental and social impact”.
 
Fred Werneck, co-founder of Clarmondial, says: “Agriculture supply chains urgently need working capital to support the uptake of sustainable practices, improve smallholder farmer livelihoods, and address climate change and biodiversity loss. With Citi and Vistra on board, the Food Securities Fund is well placed to channel institutional capital to unlock change at the required scale.”
 

In partnership with Lukka, an enterprise crypto asset data and software provider, State Street will support its private fund clients with collection, standardisation, enrichment, reconciliation, processing and reporting related to crypto and other digital assets.
 
The partnership is State Street’s latest effort in the digital and crypto asset space following the launch of State Street Digital, a division focused on addressing the industry’s evolving shift to digital finance, and comes after Lukka’s Series C funding round in December of 2020, which was led by State Street.
 
“The growth in popularity of digital assets is showing no signs of a slowdown and State Street Digital is committed to continuing to build out the necessary infrastructure to further develop our digital assets servicing models to help meet our clients’ growing demands,” says Nadine Chakar, head of State Street Digital. “Our work with Lukka will leverage their software and data in order to help expand our digital and crypto asset fund administration capabilities to alternative managers is just another advancement in our digital solution set and marks a very exciting development.”
 
State Street will leverage Lukka’s product suite, which includes a proprietary middle and back office data management solution, purpose-built for blockchain and crypto asset data, as well as Lukka Reference Data, and Lukka Prime Pricing Data. This will enable State Street to consume crypto assets that are comingled within a private client’s traditional alternative investments portfolios.
 
“As our clients continue to adopt digital assets, such as crypto, we’ve seen increasing interest among investors for institutional quality middle and back-office offerings that support diversified portfolios,” says Jen Tribush, alternatives lead for State Street Digital. “Lukka was the ideal partner to help provide these services given their leading position in crypto asset data as State Street continues to add to our growing offering in the digital asset space.”
 
“State Street is leading the charge to usher in the next generation of fund administration,” says Robert Materazzi, CEO of Lukka. “Large, traditional funds are rapidly looking to add crypto to their offerings, which leads them to ask their existing, trusted service providers such as State Street for fund administration. State Street was quick to recognise the importance of building capabilities to support crypto assets and we are proud to partner with them as funds quickly look to diversify their portfolios.”

The deal equates to 20 per cent of PraxisIFM’s overall business revenue.

As an outsourced administrator, headquartered in Guernsey, PraxisIFM has executed the deal to focus the business squarely on developing its core divisions of Private Wealth and Corporate Services, the foundations of the company since its formation in 1972, as well as its Pension Administration offering.

The agreement with Sanne, which is subject to PraxisIFM Group shareholder and regulatory approvals, will see the transfer of circa GBP25 billion of Funds Administration AuA with offices concerned including Guernsey, London, Malta, Jersey and Luxembourg. Around 90 of the Group’s circa 480 employees will transfer to Sanne. 

Proceeds will be deployed to reduce the Group’s bank borrowings, return the company to a progressive dividend policy, provide the opportunity for share buy-backs alongside a shareholder event and further enhance the Group’s proposition via continued investment in technology to compete with the market leaders and appeal to a broader range of clients in the Private Wealth and Corporate Services divisions.

Robert Fearis, Chief Executive Officer of PraxisIFM, says: “We very much see this agreement with Sanne as an opportunity to energise the Group by equipping it for the future and making PraxisIFM truly competitive in a rapidly developing market. As we enter our 50th anniversary year, this will enable us to focus on our core areas of Private Wealth and Corporate Services, setting the direction of the business and building a resilient business model that shareholders and future investors will appreciate. Our brand and reputation have been built on the strength of our client service and the quality of our people. We are exceedingly proud of our reputation, fostered by every member of our team and we intend to build upon this, with a shared culture, values and purpose, and a commitment to continued excellence. In Sanne we have found the perfect acquirer and we are confident that the business will continue to flourish under its ownership.”

Martin Schnaier, Chief Executive of Sanne, says: “The PraxisIFM Fund Administration business is a step-change acquisition for Sanne and we are delighted to have successfully concluded this deal swiftly to maximise the opportunities that are presented. The synergies between the two businesses are clear and we will seek to not only maintain existing levels of service to clients of PraxisIFM but enhance them as the assets and relationships transfer over to us. We have world-class technology to deploy, a global network that can bring significant client-value and a complementary value set that will aide what we hope will be a seamless transition for clients. Our thanks go to the Executive Team at PraxisIFM.”