BNY Mellon Acquires Full Ownership of HedgeMark

Pending regulatory approval, BNY Mellon has acquired the remaining 65% stake in HedgeMark, a provider of managed accounts and hedge fund risk monitoring, of which BNY Mellon already owned 35%.
By Jake Safane(2147484770)
Pending regulatory approval, BNY Mellon has acquired the remaining 65% stake in HedgeMark, a provider of managed accounts and hedge fund risk monitoring, of which BNY Mellon already owned 35%.

The deal is expected to close in the second quarter, and financial terms of the transaction have not been disclosed. BNY Mellon first acquired the 35% ownership stake in 2011, two years after industry veteran Ken Phillips founded HedgeMark. A combination of HedgeMark management and investors own the other 65% that BNY Mellon is now acquiring.

Following the close of the deal, Phillips will retire, and meanwhile, HedgeMark’s current president, Andrew Lapkin, will replace Phillips as CEO. Lapkin will oversee the transition, and he will report to Samir Pandiri, BNY Mellon’s executive vice president and CEO of Asset Servicing.

“As institutional clients continue their shift into alternatives, especially hedge funds, this acquisition will enable us to better meet demands for improved governance, risk reporting, and transparency,” says Pandiri. “We’ll be able to integrate HedgeMark’s capabilities with our Global Risk Solutions offerings to set a new industry benchmark on risk and transparency. It marks the next step in our strategy to provide sharper insight into hedge fund investments and enterprise risk across a client’s entire portfolio.

Acquiring HedgeMark does not bring much synergy in terms of cost savings, says George Gilmer, head of U.S. Asset Servicing at BNY Mellon, but the company will benefit from the new opportunities the deal will bring.

“We’ve got to treat this as two organizations until this closes,” says Gilmer. “But really what we’re focused on is their capability, coupled with our fund administration capability, providing clients with unparalleled insights into all asset classes.”

And adding a managed accounts provider fits in with a trend that BNY Mellon is seeing. Managed accounts are “going to continue to be a major part of the market…Not only do we feel it’s the next trend, but we see it,” says Gilmer, citing that just under ten clients currently have an RFI or RFP out for a dedicated managed account. “It gives them an opportunity to get insight into an asset class they typically haven’t had.”

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