HIG Capital said Tuesday it hired SEI to manage fund administration and depositary services for private equity and infrastructure funds based in Luxembourg and the Cayman Islands. The deal brings together a $70 billion investment firm with an administrator that handled $1.5 trillion in alternative assets last year.
SEI will plug its software into HIG’s current systems to cut down on manual data entry and give the firm better visibility into its fund operations. The setup is meant to address problems that crop up when investment firms use multiple administrators or try to handle some of the work themselves.
Brendan Dolan, who oversees finance for HIG’s European operations, said SEI’s size and technical know-how made it the right choice. “SEI’s global scale, broad operational and technology capabilities, expertise in fund administration and private markets, and local service all provide a significant competitive edge,” he said.
HIG Capital, which Sami Mnaymneh and Tony Tamer launched in 1993, has invested in more than 400 companies across seven different strategies. The firm buys middle-market businesses, lends money to companies, invests in real estate and infrastructure, and backs growth-stage companies.
Why Firms Want Fewer Administrators
Most private equity firms end up working with several different fund administrators because they set up vehicles in multiple countries. A firm might use one administrator for Luxembourg funds, another for Cayman structures, and a third for U.S. vehicles. Each relationship requires separate systems and creates data that needs to be matched up.
SEI surveyed private markets firms in June and found 58 percent would rather work with one administrator than juggle multiple relationships. About two-thirds said reducing duplicate data entry matters when they pick an administrator.
Bryan Astheimer, who runs SEI’s investment manager business in Europe, the Middle East, and Africa, said firms increasingly want partners that can eliminate redundant work. “We’re excited to partner with HIG, a firm that shares our commitment to delivering solutions that add strategic and operational value for clients,” he said.
SEI works out of offices in Oaks, Pennsylvania; London; Dublin; and Luxembourg. The company ranks sixth out of 164 fund administrators in Luxembourg based on how much money they oversee, according to Preqin data from July. SEI also works with 45 of the 100 biggest asset managers worldwide based on a Pensions & Investments list.
HIG’s Recent Activity in Europe
HIG has been buying and selling companies in Europe at a faster pace this year. The firm closed a deal for France Workwear on October 1, buying the textile rental business from Rentokil Initial. France Workwear operates 34 sites where it rents and cleans uniforms and linens for hospitals, hotels, and factories.
In August, HIG said it would take a majority stake in Avanta Salud, a Spanish company that provides workplace health services to more than a million employees. The same month, the firm sold EYSA Group, which runs parking facilities and manages traffic in Spanish cities, to Tikehau Investment Management. HIG had doubled EYSA’s earnings during its ownership.
HIG also bought Kantar Media, a London company that measures TV audiences and tracks advertising spending in more than 60 countries. The firm acquired logistics warehouses near Paris and Lyon and took control of Fluo Group, a Finnish company that collects waste and makes recycled plastic products.
The firm runs European offices in Hamburg, London, Luxembourg, Madrid, Milan, and Paris. It also has U.S. offices in Miami, Atlanta, Boston, Chicago, Los Angeles, New York, San Francisco, and Stamford, plus locations in Latin America, the Middle East, and Asia.
What Fund Administrators Do
Fund administrators handle the back-office work for investment funds. They calculate how much each fund is worth, process investor transactions, send out capital call notices when the fund needs money, and distribute cash when investments pay off. They also prepare financial statements and regulatory filings.
As rules have gotten more complicated, especially in Europe, investment firms have relied more heavily on administrators that know how to navigate requirements in different countries. Luxembourg and the Cayman Islands are popular places to set up funds because of their regulatory frameworks and tax structures.
SEI’s platform connects to portfolio company systems, investor databases, and other data sources through programming interfaces. The company says this setup gives investment firms real-time access to fund information instead of waiting for monthly or quarterly reports.
Dolan said the partnership would help HIG operate more efficiently as it continues to raise money and deploy capital. The firm recently closed its fourth middle-market lending fund with $5.9 billion in assets, which it uses to make loans to mid-sized companies.
SEI’s team based in Luxembourg and the Cayman Islands will provide local service for HIG’s funds. The company said its staff helped with the technical work of connecting systems and moving data from HIG’s previous setup.
Fund administrators compete on price, technology, and service quality. Larger administrators can spread their technology costs across more clients, while smaller firms often emphasize personal service and flexibility. SEI positions itself somewhere in between, offering both scale and customized solutions for different types of investment firms.
HIG’s choice of a single administrator for its Luxembourg and Cayman funds suggests the firm values consistency across its different vehicles. Investment firms typically hold onto administrator relationships for years unless service problems arise or better technology becomes available elsewhere.
