Partner ● Brown Brothers Harriman
Seán Páircéir is a believer in mutual funds. “As fund administrators, we facilitate a good idea,” he says. “The diversification of risk.” Risk, as it happens, is something Seán Páircéir has always weighed carefully. His earliest ambition was not to crack net asset value, but to act on stage and screen. And he nurtured this aspiration through adolescence and University College Dublin, where he studied English literature as well as French. Páircéir still values the lateral perspective yielded by prolonged immersion in great works of literature. “If you have studied the works of William Shakespeare, you have a pretty encyclopedic perspective on all forms of human motivation,” he says. That understanding extends to a good grasp of his limitations. “When I told my grandmother I had to choose between acting and a banking career, her answer was pretty brisk,” he recalls. “She said, ‘That is not really a choice, is it?'” Though Páircéir finds her logic hard to refute, now as then, he is not dissuaded by the experience of those contemporaries who made a different choice. One of them, Conor Macpherson, went on to become a well-known playwright. Another, Aidan McArdle, became the youngest actor, after Laurence Olivier, to portray Richard III at the Royal Shakespeare Company, and has since played a number of film and television roles.
That affection for the theatre, tempered by realism, was obviously inherited. His father, who had played a part in the legendary original Gaelic production of “The Hostage” by Brenda Behan, ended up as chairman of the Irish Revenue. Páircéir Senior was also one of the Three Wise Men who, in the mid-1980s, conceived and designed the International Financial Services Center (IFSC) in Dublin, so perhaps a career in fund administration was also pre-ordained. In fact, Páircéir recalls his father bringing home the blueprints for the IFSC in the mid-1980s. What those blueprints predicted for the docklands of the Irish capital- large office blocks surrounded by coffee houses, restaurants, shops, modern apartments and yachts-has largely come true. What began as an urban renewal project turned, thanks to a 10% rate of corporate tax, into the hedge fund administration capital of the world. “It worked because the plans had a fairly hard-nosed, pragmatic view of what could be attracted to Ireland,” recalls Páircéir. “It was based on the fact that technology was making it possible for the back office to be separated from the front office, and that asset management was modernizing, with new techniques being brought to bear on collective investment vehicles. That was how I was introduced to the role that Ireland could play in the internationalization of the financial services industry.”
Indeed, he spent the summer of 1990 working as an intern in New York at Chase Manhattan Bank. When they offered him a job at the newly opened Dublin office, he stayed for a decade, helping Doug Bonner (then managing director of Chase Manhattan Ireland), John Fabrizio, Mary B. Maguire (who, sadly, died in 2009), Tony Carey (now COO, State Street Investor Services, Europe Middle East Africa), Carin Bryans (now country head, Ireland, for J.P. Morgan) and Chris Lynch (now head of sales at J.P. Morgan Worldwide Securities Services in New York) to establish what is now the 500-person UCITS fund servicing business of J.P. Morgan in Dublin. “I took to fund accounting for some strange reason,” says Páircéir. “I cut my hair and became a fund accountant.”
Becoming a fund accountant proved oddly liberating. Being less than synonymous with chartered accountancy-Páircéir has a technical, rather than a professional, qualification-it opened opportunities for leading a variety of businesses across the back office. “For those of us who took to it, fund accounting kept on delivering opportunities,” says Páircéir. At Chase, he learned (“the hard way”) how double-entry accounting interacts with data-driven computer systems; devised training courses and wrote training manuals for new recruits; and rose steadily through the ranks to vice president and head of new business, in which role he combined sales, relationship management and operations. But it became obvious that further ascent at Chase was dependent on moving to London or New York, and Páircéir wanted to stay in Ireland. “I was newly married and had a couple of children,” he explains. “I wanted to build my career, but needed to do so in Ireland.” He knew Jeff Holland through the Irish Funds Industry Association, where they had jointly led the project to build its first Web site. When Holland asked Páircéir if he would be interested in leading the development of the Brown Brothers Harriman (BBH) operation in Dublin as managing director, the decision was not difficult. The interview process, involving multiple partners in several jurisdictions, was more challenging. But Páircéir liked the consensual approach to decision-making, the obvious decency of the people and the value they attached to good manners. He also noted the fact that BBH had already demonstrated its commitment, and the success of its way of doing business, in Luxembourg. Best of all, in 2000, there was a demonstrable opportunity to grow the business rapidly.
And that is exactly what happened. When Páircéir started work at BBH that year, the firm had $4 billion in assets under administration (AuA) in Dublin. He set a target of matching the scale of the business he had left behind at Chase ($47 billion) within three years-and hit it, with $1 billion to spare. A dozen years on, BBH Dublin serves 40 clients and has $175 billion in AuA. It is lower than the peak ($190 billion) but still enough to make BBH the fifth largest fund administrator in Ireland. Of course, it helped that the Dublin market as a whole grew rapidly, from $200 billion to more than $2 trillion in 2007. It also helped that BBH could bring to Ireland existing fund management relationships that were eager to distribute funds in Europe. At PIMCO, for example, assets under management (AuM) in Europe soared from $18 billion to $90 billion in just three years. “It is not our journey,” cautions Páircéir. “It is that of our clients, and their ability to gather assets. We cannot be too proprietorial about their successes. However, even if we did not contribute directly to their success, at least we did not get in their way. Our role in the funds industry is to act as an enabler to distribution, helping our clients deliver their investment management capability to the market.” But Páircéir can still take a share of the credit. It is not easy to build multi-currency fund accounting platforms for global fund managers whose AuM is growing at annual rate of 71% compound, and whose demands include currency hedging, multiple share classes, diverse pricing schedules and complex fee structures. It entails piecing together complicated combinations of technique, regulation, law and technology, without undermining the existing business.
In doing that, Páircéir has played to the principal strength of BBH: helping orthodox but large mutual fund managers deliver regulated products on a global scale. Though it means that the firm has eschewed the largest element of the Irish fund administration industry-namely, hedge funds- Páircéir makes no apology for sticking with the house preference for forming long-term relationships with institutional fund managers. “Ireland may be about hedge funds, but BBH is about supporting a specific client segment-global asset managers who want to distribute ’40 Act and UCITS funds in multiple jurisdictions-and it is not an approach to the business which particularly suits hedge fund managers,” he says. “At the height of the boom, we came across 29-year-old Italians with uncles in insurance companies, which wanted to put $150 million into Cayman-domiciled hedge funds serviced out of Dublin. A number of groups have done well out of servicing that kind of business, but it did not and does not fit with our model of servicing long-term institutional relationships. Because we have managed to define a space for ourselves, and grow our business through the ups and downs of the cycle, our clients understand, and appreciate, that we have a focused view of the type of business that we want to service.” Besides, BBH is not wholly averse to alternative asset classes (it is a market leader in Luxembourg-based real estate funds) and the growing convergence of investment management techniques means that even its otherwise conventional clientele still wants a fund accountant that can support high-frequency trading and value complex OTC derivatives. “We have mastered and built those competencies, but we have not used them to pursue hedge fund managers,” says Páircéir. “We have stuck to our knitting, and done OK on the back of it.”
OK enough, it turns out, for BBH to offer Páircéir a partnership in 2009, only a couple of years after his predecessor Jeff Holland was honored in the same way. In fact, Páircéir sees his partnership as recognition of the centrality of the Irish operation to how BBH services its global book of business today. Dublin now supports clients distributing UCITS funds throughout Asia. The global head of transfer agency-a capability developed for the firm under the leadership of Páircéir between 2006 and 2009, after it became clear that in-sourcing the service no longer worked for clients who were keen to pay their distributors in Europe and Asia promptly and accurately- is based in the Irish capital. Páircéir himself was at one stage global head of fund administration and accounting, and is now global head of the asset management client segment. His own career exemplifies the fact that the viability of Dublin as a global financial center, which was openly questioned until at least the mid-1990s, is no longer even raised. In fact, Páircéir can scarcely conceal his pleasure at the irony of being a global head of a global business in the most global industry in the most globalized economy in Europe while scarcely moving from the place where he entered the world in 1969. “I was born a mile from here, I live a mile from here and I have worked in a global business within that triangle for the last 20 years,” he jokes. “I am, for better or worse, a Dubliner. Though I have noticed of late that, as a calling card, it is worse rather than better.”
Certainly the financial crisis has battered the Irish economy. But Páircéir is the first to admit that the problems of his native country were almost entirely self-inflicted. “We have had a very understandable crisis,” he says. “We believed that the value of land and property would increase. Banks believed it. Society in general believed it. The government believed it. And it was simply not true. You do not have to explain a collateralized debt obligation to [U.S. financial journalist and author] Michael Lewis to explain what happened in Ireland.” Far from denting his confidence in the financial markets, the Irish crisis has reinforced the faith of Seán Páircéir in the industry he serves. “Smaller investors in Ireland used to say they were diversified because they had divided their share portfolio between the Bank of Ireland, Anglo-Irish Bank and AIB,” he says. “If people had been invested in mutual funds instead of direct shareholdings they would not have suffered such dramatic losses. It is [a] pity that the mutual fund industry is not a greater feature of the savings industry in Ireland, as opposed to being a feature of the Irish economy.” Or, rather, a feature of a part of the Irish economy, for Páircéir argues that Ireland really has two economies today. The first consists of globalized industries such as pharmaceuticals, technology and the funds industry. The other is a purely domestic one, made up of property developers and their backers in the commercial banking industry. “Those who bought land and funded property developments stole our economy,” he says. “Essentially, they transferred the benefits of the competitiveness of Ireland to their back pockets by pushing up the value of land, running up these overpriced developments and then lumbering the state with the debts they had acquired. However, the Irish were the first to take the medicine, and we are now an exemplary patient.”
Anyone who spends time with Seán Páircéir cannot fail to notice his laconic, self-deprecating humor. The two children he had in 2000 having doubled, he has less time for the theatre and the gallery, let alone the solipsistic void. In a social setting, he says, his wife rarely lets him get beyond the third sentence of a description of what he does all day. “It is important not to get carried away with yourself,” says Páircéir. “Although what we do has value, you are still a fund accountant and a custodian, not a master of the universe. The day-to-day is what we get paid for. So it is important to pay attention to the details, and to remember that the client is paying you for delivering certain capabilities. You need to be aware of that, and of the impact which not doing it well has on your client. Your opportunity to talk high-level strategy with your clients-where they are going next, what they are trying to do and what you will need to do to support their expansion-is built on making sure the people, processes and technology running your businesses work every day, and work effectively.” This respect for the quotidian is allied to an understanding of the human. It is of the kind that makes it easy to understand why clients and colleagues like working with Seán Páircéir. “It is important not to burn bridges when you are traveling in a circle,” he warns. “This is a small business in a small world, and you constantly meet people who are colleagues one day, and clients the next. In this business, ‘victories’ over other people are invariably Pyrrhic. You will encounter the person you are dealing with in some shape or form at some point in the future.”