Hedge Fund Manager Outsources Middle Office to Viteos

Capricorn Fund Managers, a Johannesburg and London based hedge fund manager, has outsourced its middle office to Viteos on a co-sourcing model.

The mandate will transfer Capricorn’s middle office from BNY Mellon Investment Servicing (International) Limited following a periodic strategic review, where Capricorn initiated an RFP and selection process, separating its middle office provider and fund administrator.

As part of its requirement, Capricorn looked for its middle office provider to retain Linedata Beauchamp as its portfolio management system, which had the entire history for all the funds.

It also wanted the provider to put in a structure where middle office was independent of the fund administrator, select a credible supplier who could transition the middle office process and collaborate with Linedata, BNY Mellon, and Capricorn. Lastly, it wanted an institutional level middle office capability, working with multiple fund administrators, thereby ensuring scalability, wider asset class coverage and support based in London and Johannesburg.

Capricorn opted for a co-sourcing model, where the technology and data is owned and retained by the manager with the middle office outsourced to Viteos. The structure and engagement model gives Capricorn control and oversight on its data and de-risks any cash, positions and trade breaks, which are reconciled and resolved between prime brokers, funds, fund administrators and middle office daily by Viteos.

Linedata in London supported the transition of the middle office process, which helped in setting up the new license with all the existing interface, reports and fund set-up – along with historical data migration. The data and process migration including testing was completed over four weeks, with Capricorn going live, in advance of the existing service with BNY Mellon ending on December 31 2014. Capricorn facilitated the transition of its fund administration and middle office services in less than 30 days.

Douglas Stott, head of operations, Capricorn Fund Managers states: “The new set-up gives us an edge with no impact on data and our portfolio management system, thanks to collaboration between the Capricorn, Viteos and Linedata.”

Capricorn has plans to grow hedge fund assets under management to $1 billion by 2018.