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FE fundinfo’s purchase of Fundsquare is the latest in a string of acquisitions under the leadership of Hamish Purdey.
When he joined as chief executive in March 2020, Purdey made sure the Covid pandemic did not stop the firm from making notable acquisitions across the UK (Cashcalc), Denmark (FundConnect), Australia (Zenith) and Liechtenstein (CSSP).
In an interview with Money Marketing last month, he laid out the three factors which define its approach to acquisitions: product, geography, and people. “We’re not doing acquisitions for acquisitions’ sake; we’re doing them for very targeted and good-quality reasons,” he said.
Its latest buy – Fundsquare – is a European provider of fund registration and regulatory reporting services, based in Luxembourg. It serves global asset managers and fund industry service providers.
So what does this acquisition mean for the company?
In its announcement of the deal, FE fundinfo said the combination of the two firm’s services is a “unique opportunity” to create a “pan-European champion” in fund data, reporting and infrastructure.
Simon Bussy, consulting director at Behaviour Consulting, tells Money Marketing the deal is a “well-timed and thoughtful” expansion to increase coverage of European fund jurisdictions.
He believes it puts the company in an “increasingly strong position”, not just geographically but all along the investment value chain.
It is interesting to note that the sale was facilitated through a tie-up with the Luxembourg Stock Exchange (LuxSE).
Fundsquare itself is located on the premises of LuxSE and is supported and developed by it. The business has experienced “strong growth” over the past few years and currently has 65 employees.
Purdey tells Money Marketing FE fundinfo has admired Fundsquare for “a long time”. The business has also been in conversation with LuxSE for a while about a potential tie-up.
“The partnership we’ve entered into is great for both parties,” he says. “Certainly Julie Becker [LuxSE chief executive] and her team will be fantastic partners for us going forward.”
Financial Technology Research Centre managing director Ian McKenna says: “This is the fifth acquisition by FE in the past 15 months.
“Creating a pan-European infrastructure for data and reporting should enable FE to offer similar synergies and savings to fund managers around the world.
“The deal is a further example of how the company is building both a breadth of propositions and a global footprint. This is a great British business turning itself into a global player.
“The LuxSE becoming an investor in the business is a huge endorsement in the company and the management team. Certainly one to watch over the months ahead.”
One thing the deal provides is an opportunity for LuxSE and FE fundinfo to explore joint opportunities in ESG-related products and services.
The idea is to “leverage LuxSE’s experience” in this domain and FE fundinfo’s own ESG capabilities from its CSSP acquisition. FE fundinfo said when it bought CSSP that its people are “absolute experts in the way asset managers or distributors need to understand various ESG factors”.
Purdey explains: “We provide ESG reporting to a number of our customers today. And we’ve signed some good quality deals, as far as that’s concerned.
“LuxSE has some really significant credentials in terms of ESG reporting and information. We felt there could be a significant overlap in terms of their data and our reporting technology.”
MM meets FE fundinfo’s Hamish Purdey – First into bat during a pandemic
Bussy says we should expect to see increased focus and expertise in the ESG space from FE fundinfo as a result of the deal. It should be able to start “helping advisers sort the wheat from the marketing chaff” – something which is sorely needed in the ESG space.
As part of the acquisition FE fundinfo says it will also establish a “centre of excellence” for regulatory reporting, based in Luxembourg.
“We’re a technology company, first and foremost,” says Purdey. “But also, in order to create great solutions, we need real domain experts. We’re really excited about the combination of the Fundsquare staff and our staff.”
Ultimately, he wants all staff to be the “absolute domain experts” in regulatory reporting and fund registration capabilities, which is why the new centre is exciting.
“If they do this right,” says Bussy, “they’ll increasingly become a critical part of many adviser firm’s toolset.”
And the deal could benefit more than just advisers and their clients. As aforementioned, FE fundinfo bought CashCalc last year.
McKenna says the number of digital fact-finds completed by clients in 2021 alone was about 70,000 – around 67% new clients.
The firm estimates that this saved its users about £5.7m worth of adviser or planner time.
This new deal has the potential to offer similar facilities to asset managers, he suggests.
FE fundinfo appoints chief product officer amid period of growth
As for the future, FE fundinfo does not intend on making this its final acquisition. There are certainly more in the pipeline.
Bussy says, going forward, we should expect to see further acquisitions to consolidate FE fundinfo’s global position.
We should also look out for further critical integrations with other adviser tech to help advisers operate more effectively, and professionally – providing their clients with better outcomes.
Purdey says: “We’re still very strongly focused on organic growth. The business is still growing strongly organically, and continuing to sell the existing products, to many more customers.
“But where we see an opportunity, either for geography, for people or for product, then we’ll continue to acquire.”
He says there is a “wonderful array” of smaller software companies all the way through Europe, Australia, Asia, and even in the US that the firm is looking at as a potential acquisition.
“Each of them offers something different, whether it be a specific product piece that we can add to our backbone, or whether it be a specific geographical market outlook, or whether it also be a group of people who are real domain experts,” he adds. “So that’s exciting.”
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