GTCR scoops up Ultimus Fund Solutions, Gemini Cos

GTCR, the veteran fintech investor, is scooping up two mutual-fund administrators.

The Chicago buyout shop said Nov. 19 that it agreed to buy Ultimus Fund Solutions and Gemini Cos. Terms weren’t disclosed.

GTCR, which is merging the companies, will have a majority of the combined firm. Management is rolling over a stake.

The combined company, operating as Ultimus Fund Solutions, will service about $150 billion of assets under administration and more than 840 funds. Staff for Ultimus will number more than 500 professionals.

Gary Tenkman, Ultimus’s president, will become CEO while Kevin Hesselbirg, Gemini’s CEO, is joining the board and will serve as an adviser. Ultimus founders Bob Dorsey and Mark Seger will continue as vice chairmen. Tenkman, Dorsey and Seger are all investing in the new firm.

Gemini, part of NorthStar Financial Services Group, had more than $65 billion under administration as of May 31, 2018.

It provides fund services, including portfolio administration and accounting, investor servicing tools, compliance programs and tax guidance for customers including mutual funds, hedge funds, ETFs and PE funds. TA Associates acquired a majority of NorthStar in April 2015.

Ultimus offers administration services like fund accounting, transfer agent, distribution and middle office services, to mutual funds, hedge funds and PE funds. It has about $75 billion in AUM. LLR Partners invested in Ultimus in 2012, PitchBook said.

Banks have been a major provider of fund-administration services, said Collin Roche, a GTCR managing director. With the deals, Ultimus will be looking to compete against banks in the sector, Roche said.

“The combined scale of the new organization, plus complementary capabilities, will enhance the breadth of Ultimus’s offerings. Enhanced scale and broader capabilities will also allow the combined business to offer services to larger clients than previously,” he said.

LLR and TA are both exiting with the transaction, sources said.

Auction process

Gemini’s sale to GTCR resulted from an auction process. Buyouts reported in September that TA had put Gemini up for sale. Raymond James advised on the auction.

GTCR drew on a prior relationship with Ultimus principals that enabled it to quickly come to agreement with both parties, Roche said.

The PE firm signed purchase agreements for both deals simultaneously, he said. The transactions are expected to close in Q1.

GTCR is investing from its 12th fund, which closed on $5.25 billion in October 2017.

Once it closes, GTCR will work to grow Ultimus, Roche said. “We’ll be looking to do strategic acquisitions that add either product or technical capabilities, different geographic coverage or deepen the asset class that will help us continue to offer broader solutions to our clients,” he said.

John Simpson and Kurt von Holzhausen of Broadhaven advised GTCR.

Executives for TA, LLR, Ultimus and Gemini could not immediately be be reached for comment.

Action Item: Contact Collin Roche at +1 312-382-2200.