Clearstream Closes on Citco's Hedge Fund Custody Processing Business

Clearstream has closed on its acquisition of Citco’s Cork-based Financial Institution Hedge Fund custody processing business, valued in the mid-double-digit million euro range.

The deal expands Clearstream’s investment fund services business, allowing the firm to cover all fund types including exchange-traded funds, mutual funds and alternative funds, and now Clearstream will be able to further automate and standardize processing for all fund transactions.

As part of the deal, Clearstream will license Citco’s source systems for the IT infrastructure, but Clearstream will also use its own Vestima platform on the front end.

At the time of the deal, which had been approximately 18 months in the making, Philippe Seyll, member of the Executive Board and head of Investment Funds Services at Clearstream, said, “We aim to enlarge business volumes on our Vestima fund processing platform, largely as a result of cross-selling synergies of the new hedge funds services to traditional mutual fund clients and our mutual funds services to new financial institutions traditionally investing into hedge funds.”

In addition to using Citco’s systems, Clearstream will also add around 300 Cork-based employees from Citco. Plus, all of Citco’s customers from this part of the business have agreed to migrate to Clearstream, says Seyll.

Citco had wanted to sell the business to focus on its core activities of asset servicing for alternative funds, and it will continue to provide custody services to fund of fund clients, along with administration and other financial and reporting services.

For Clearstream, though, the hedge fund custody processing business has high potential. Seyll says that Clearstream plans to double this business within the next three years.

Due to the size and importance of this deal, Seyll says that Clearstream does not have any plans to make other similar acquisitions for now.