Kanwar is a senior vice president and managing director at SS&C Technologies, which recently launched a new hybrid funds group to support fund administration, accounting and reporting.
“Private equity and hedge funds are converging a little bit,” he said. “Whether it’s distressed debt or bank loans, more people are doing [other types of investments] at private equity firms. You’re also seeing big asset management firms running hedge funds and private equity funds.”
For example, Kohlberg Kravis Roberts & Co is expanding into hedge funds through its KKR Prisma unit.
The answer for the rise of the hybrids is a one-stop fund administrator able to deliver accounting, compliance, reporting, portfolio monitoring, tax and financial statement processing and other services, Kanwar said. SS&C Technologies (Nasdaq: SSNC) works with 1,500 investment management firms managing about $645 billion in assets. The private equity firms it works with manage about $125 billion.
Looking ahead, SS&C Technologies sees growth potential from the formation of new private equity and hedge funds spinning out of older shops, new assets coming into the industry and lifting overall AUM, and a retreat from the fund administration space by big corporate banks. For instance, Citi announced plans this year to divest its non-core securities and transaction businesses in its Institutional Clients Group, including its hedge fund administration business.
While some big private equity firms continue to handle their fund administration duties in-house, the growing complexity of compliance and reporting supports outsourcing those functions to specialists, Kanwar said.
SS&C operates around the globe, but it tends to focus resources near its big clients. It employs 700 people in and around New York, for example. “We’re in the places where our customers are,” Kanwar said. “Our customers like that.”
Across all its business lines, SS&C grew its adjusted net income by 9 percent in the first quarter, while absorbing its acquisition of DST. Early this year, SS&C set plans to buy Advent Software Inc, a data and work flow specialist for investment management firms, for $2.7 billion in cash.
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Correction: An earlier version of this story incorrectly listed Rahul Kanwar’s email address. This story has been updated with the proper information.