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GlobeOp sees assets under administration grow 22 per cent in first half

Date: Friday, August 8, 2008
Author: HedgeWeek

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Hedge fund administrator GlobeOp Financial Services, which offers business process outsourcing, financial technology services and analytics to hedge funds and other asset managers, has reported a 22 per cent increase in assets under administration during the first six months of this year, from USD85bn to USD104bn.

GlobeOp announced a 21 per cent increase in revenues to USD94.5m, and 45 per cent growth in adjusted operating profit to USD24.6m. The firm's staff has grown by 11 per cent over the past 12 months to 1,789 employees, and GlobeOp says productivity improvements have boosted assets per employee USD53m to USD58m.

'The first half of this year was another period of excellent growth for GlobeOp, despite the continuation of the most challenging market conditions experienced in many years,' says chief executive Hans Hufschmid.

'Increasing assets under administration by more than a fifth over the past year, including USD7bn during the first half of 2008, is a testament to the quality of our systems and services and also to our clients' resilience.

'Our profit figures also reaffirmed the power of our operating model. Similarly, our belief that transaction processing for complex derivatives would be a significant area of growth for GlobeOp has been confirmed by the tripling of revenues from the over-the-counter derivatives business, which although still relatively small, demonstrates our leadership in a fast-growing market.'

The firm says the outlook for the new business in the second half of the year looks robust, with USD1.5bn of assets from new clients and more than USD1bn in new funds from existing clients added in July.

'Recent activity in our new business pipeline is encouraging,' Hufschmid says. 'July represents our strongest month of new client launches this year, fuelled in part, we believe, by a trend of established hedge funds increasingly converting to leading administrators such as GlobeOp.

'We will maintain our emphasis on sales and marketing activities to expand market share and we remain committed to continual client service enhancements. Combined with our highly efficient and scalable operating model, we believe this positions us well for the future.'

Keefe, Bruyette & Woods analysts Michael Long and John Holmes concur, saying: 'Assets under administration continue to grow despite tough conditions, reaching USD104bn, up from USD97bn at the end of 2007, USD100bn at the end of March, and USD102bn at the end of May.

'This is highly encouraging in light of the tough market conditions for the hedge fund industry. Growth in assets in the first half of 2008 was driven primarily from organic expansion of existing clients through net subscriptions and launching new funds. We believe growth from new clients was modest, while redemptions and performance were not significant.'

GlobeOp provides automated integrated middle- and back-office, administration and risk reporting services to hedge funds and asset managers including banks, insurance companies, mutual and pension funds and proprietary traders.

Established in 2000, GlobeOp serves around 160 clients. A company registered in Luxembourg, GlobeOp employs some 1,800 people at its headquarters in London and New York and offices in Dublin, George Town (Cayman Islands), Harrison (New York), Hartford and Mumbai.