In March, SS&C bid 485 pence per share to take over rival fund administrator GlobeOp, trumping a 435 pence offer by private equity firm TPG. Management and ultimately regulators approved the deal, which closed last week when holders of 99.95% of outstanding GlobeOp shares approved the nearly $900 million acquisition by SS&C.
Global Custodian spoke with Bill Stone, chairman and CEO of SS&C, about the firms plans following the acquisition.
When did SS&C first consider acquiring GlobeOp, and what made it an attractive target for you?
Weve known GlobeOp for ten to 11 years. They were a software customer. We competed with them directly for the last six to seven years. Weve seen their growth and admired what theyve done, and if ever there was a chance [to acquire GlobeOp] then we would have been interested. We found out there was a chance when we learned in early January that they were in play.
So you found out GlobeOp was for sale after TPG made its initial offer?
There was a story in early January which basically said TPG and Advent International were looking at GlobeOp, and that Evercore was [GlobeOps] adviser, so we talked to Evercore and told them we would be interested in taking a look. By January 14 we were in the data room starting our due diligence, and we were impressed with what they had done and very interested in acquiring them.
Can you discuss your plans and the timeline for integration of GlobeOp platforms and migration of clients?
Weve begun the integration in earnest. We have had joint meetingsseveral joint development meetings. Ive been on the phone with a number of their prospects and clients and had meetings with a lot of their people. I just got back from Mumbai, which is very important operationally. Hans [Hufschmid, GlobeOp CEO] and I were there. The visit went very well.
As far as things like migration, we really dont have any immediate plans for migration of any of our customers other than to offer products and services they dont have now, which in the case of GlobeOp customers could be some of our tax services, mobility platforms or other things we do which they dont do[such as] private equity fund administration. For SS&C clients, there are a number of applications that GlobeOp has built that are very attractive to our clients, such as their middle-office capabilities and OTC valuation capabilities as well. There are a number of things we are focused on, including providing services which delight our customers.
So youre going to operate the two businesses separately?
I wouldnt say we will keep them separate, but they will have their own identity, and the management will be consistent. We have a number of things SS&C does very well, and hopefully we will impart that to them and they will impart to us. I wouldnt say they will run independently, but they will have their own identity, and I think we will keep the vast majority of their management team, and obviously the employee base, and we are very excited about what we have as an opportunity going forward. And remember, these are two very strong companies, so theres no reason to hurry.
You said the majority of the management team will remain the same. Does that include GlobeOps CEO, Hans Hufschmid?
Hans will be around throughout the integration. Weve talked to him about staying longer than that, and were certainly supportive of whatever hed like to do.
It sounds like you are implying he is not staying.
Were just trying to be supportive of any decision Hans decides to make following the full integration of GlobeOp with SS&C.
[Editors note: A request for comment from Hufschmid through GlobeOps public relations agency was not immediately returned.]
GlobeOps business strategy has been to establish most of its operations in low-cost India. Is this SS&Cs strategy as well?
Historically our operations centers have been in Toronto; Windsor, Conn.; New York; and New Jersey. We have recently opened up a processing center in Evansville, Ind. We have a lot of capability, a lot of outlets, for different clients based on what it is they need, and I believe the India operation just gives us another one of these processing centers for certain clients [who] will be best served in India.
What changes should existing clients of SS&C and GlobeOp expect?
I think mostly what they will see is new products and services based on what the combined company now owns, and we intend to delight those customers with any changes we have, which will be transparent to them, and they will see well in advance anything we will consider changing. We have very high customer satisfaction from both client bases. We want to build on this, not tear it down.
Will the combined administrators retain the SS&C GlobeOp name or are you considering another name for the business?
Right now, for fund services, it will be [called] SS&C GlobeOp. It is the number-three administrator in the world with $424 billion in assets under administration, and almost, or more than, 3,000 people focused on the alternatives space in offices around the world. I think SS&C GlobeOp services will be the target in that space, but in other markets such as pensions, insurance, real estate, commercial lending, even long-only asset managers, GlobeOp is not nearly as well known [as SS&C], and we probably wont transfer the name.
Assets under administration is hugely important in the fund administration space. Will you consider further acquisitions to grow even larger, especially now that other large administrators are talking about consolidating?
Certainly, yeah, we will be there. Were a very strong franchise and generate lots of cash flow. We will focus on GlobeOp and [middle and back-office solution provider] PORTIA [acquired from Thomson Reuters in May] and integrate them in a smooth fashion. We are content on growing and providing.
So youre more focused on integrating your new acquisitions and building the business than looking at acquiring more firms?
I would say both. I wouldnt say we are going to move on one in the next couple months, but we will be looking at them. We still have some dry powder, but we have work to do. We will try not to get our eyes ahead of our stomachmethodical, disciplined.
Anything else you would like to mention?
I think its pretty interesting to see SS&C GlobeOp being the third-largest administrator, the only independent, publically traded administrator in the top ten which is not bank affiliated. We think the ability to have reconciliations between an independent company like us and the bank is a competitive advantage. When the administrator is owned by a bank, you lose that separation of duties, that independence. Investors in various funds have become more concerned and aware and interested in how funds operate their administrative services, accounting and reporting, which have all been under an awful lot of scrutiny.
Christopher Gohlke