Private Equity and the ManCo Marketplace

Gilles Gerber, Tom Piotrowski, Ilia Prokashev, Rob Gibbons

Private Equity Investment in the Sector

Over the past 2-3 years, the Authorised Corporate Director (ACD) and Management Company (ManCo)1 sector has experienced explosive growth across the UK and EU. This has been driven by several factors including Brexit, the changing regulatory environment in the UK and Europe, and cost-cutting needs in the industry. Taking advantage of these factors, established ManCos have soldiered on in their M&A activities, resulting in growth of ManCo-related transactions despite the economic uncertainties arising from the COVID-19 pandemic.

There is a significant opportunity for private equity firms to bring together a number of ManCos, including those being carved out from asset managers. This is with a view to establishing a more scalable business which grows and manages cost more effectively than the individual acquired firms. The firms that succeed in scaling are able to manage a range of services at a lower overall cost base and are able to attract the most AUM by providing increased expertise to clients as well as being able to leverage relationships with a wide range of service providers.

The ManCo sector is especially attractive to private equity firms, not just because of the speed and scalability of the opportunities available, but the nature of the ManCo business means that the private equity firms will also benefit from consistent and predictable revenue streams.

1 ACD is typically used in the UK whereas ManCo is an EU term. We will use the term ManCo for the purposes of this article.


Key Private Equity-Backed M&A Transactions

Private equity investment has brought together a series of smaller ManCos into much larger companies, able to offer services to investment funds. The significant impact of private equity investment is reflected in the largest European ManCos.

Four of the top nine firms by AUM are owned by private equity firms:

Company Owner Owner Type AUA

(€mln as of Dec 2021)

PE Transaction Date
Universal Investment Luxembourg S.A. Montagu Private Equity 108,146 September 2016
FundRock Management Company S.A. Apex Group (Backed by PE firm Genstar Capital) Private Equity 107,081 February 2021
Carne Global Fund Managers (Luxembourg) (S.A. Vitruvian Partners Private Equity 92,587 January 2021
Hauck & Aufhaüser Fund Services S.A. Hauck & Aufhäuser Privatbankiers AG (Backed by Fosun International) Multinational Conglomerate 70,844
GAM (Luxembourg) S.A. GAM Financial Services Group 54,621
UBS Fund Management (Luxembourg) S.A. UBS Group Financial Services Group 47,876
Waystone Management Company Montagu / Hg Private Equity 41,965 July 2021
FundPartner Solutions (Europe) S.A. Pictet Group Financial Services Group 37,622
Lemanik Asset Management S.A. Lemanik Group Financial Services Group 34,686
LRI Invest S.A. Apex Group (Backed by PE firm Genstar Capital) Private Equity 29,745 February 2021


The significant impact of private equity investment is also reflected in the UK market with some of the major players in the market already securing financing from these private equity houses:

The significant impact of private equity investment is also reflected in the UK market with some of the major players in the market already securing financing from these private equity houses:

AFM Ownership PE Transaction Date
Conbrio Privately Owned (Employee)
Fundrock Privately Owned (PE) February 2021
Waystone Privately Owned (PE) July 2021
Link Public
Evelyn Privately Owned (PE) June 2020
Thesis Privately Owned (VC)
IFSL Fund Services Privately Owned
T. Bailey Fund Services Privately Owned
Carne Group Privately Owned (PE) January 2021
Maitland Privately Owned
Margetts Privately Owned


Impact of Private Equity Ownership on ManCos

Private Equity firms have been keen to scale the ManCos they have acquired, providing capital to drive efficiency and effectiveness, most notably:

  1. Increased business efficiency and economies of scale due to increased AUM.
  2. A broader range of products and services, targeting funds of different sizes, geographies and capabilities.
  3. Enhanced technology and automation from best-in-class vendors and technology scaling expertise.
  4. Improved sales team and processes, leveraging cumulative industry experience.

2023 Outlook and Implications on the wider marketplace

As might be expected, consolidation due to private equity investment has resulted in fewer players servicing a greater number of small to medium-sized investment managers. The entrance of additional private equity firms in this space, and continued M&A activity, will continue to have significant impact on the sector in 2023 and beyond. Here we present our view for the next year and implications for the private equity firms themselves, the ManCos and asset managers:

Private Equity Firms

In 2023, there will continue to be an elevated level of consolidation activity across the industry as private equity firms continue to invest in ManCos and their consolidators. In short, this is the year where some of the major PE rollups come to market. For the private equity firms, we see four possible exit routes:

  • Consolidate the consolidators: Merger with another large (and likely PE-owned) ManCo
  • Sale to a technology provider
  • Sale to an outsourced middle office provider
  • Initial Public Offering (IPO)

For a private equity firm, the choice of targets will reduce as the industry consolidates and there will be fewer opportunities across the board.

Smaller Individual ManCos

In 2023, smaller individual ManCos will find it increasingly difficult to win new business – “why appoint a smaller ManCo given the trend for them to be acquired and scaled?” They may have to focus on a specific service, geography or client type to succeed. Smaller ManCos should explore the choices of acquiring financing for growth through acquisition or selling the business. When ManCos start exploring selling out the business, private firms are the first who come into the picture, providing the necessary capital.

It should be noted that ManCos take responsibility regulatory oversight of the asset managers, a topic that is receiving increased scrutiny from regulators. Therefore PE firms must be prepared to invest to ensure compliance. Those that do not risk incurring penalties, fines or reputational damage, all of which are punitive to ManCos. Failure to recognize this and ensure suitable investment and controls could attract regulator attention and inhibit growth.

ManCos – Larger Consolidators

Larger consolidators will have the opportunity to further scale their business, offering a greater range of services to managers and thereby increasing their AUM. Those acquirers who can succeed in coordinating a set of deals will be able to build a strong position in a consolidating market. It is essential that those firms act now in order to stay in line with the consolidation curve seen through the industry.

Implications for Asset Managers

The entrance of private equity firms into the sector also present opportunity for asset managers. There is a prospect of being able to focus on the core investment business and divest an ancillary third-party ManCo business or outsource internal ManCo activities to these specialist firms.

As regulator scrutiny intensifies an increasing amount of Asset Managers may prefer to divest their non-core third party servicing business to avoid potential mishaps impacting their wider reputation and business model for activity that is not essential to their strategy. Moreover, these increased requirements may divert Management time and attention away from their core investment management specialisms.

The infrastructure and independence required to demonstrate sufficient oversight to satisfy local regulators in the various jurisdictions creates a complicated business model that may persuade some Asset Managers to take advantage of specialist providers. These opportunities will persist as the consolidated ManCos continue to grow and evidence their capability to scale successfully with the skills and footprint across required geographic markets.

Typically at a certain scale, Asset Managers have in-sourced their ManCo activity to retain the relevant expertise and retain control of these important responsibilities. While we expect this to continue to remain the case in the large, for the reasons noted above we hypothesise that some Asset Managers may be increasingly more willing to outsource their internal ManCo activities, presenting opportunities for themselves to simplify and streamline their operating model. This would have the added benefit for the ManCo sector of growing the Total Serviced Market that is available to win new business from.

How Alpha FMC can help

Our strategy and M&A support bring market insights from SMEs dedicated to the sector. Whatever your reason for M&A activity, our entire team focuses on one industry helping clients diversify their product range, enter new geographies and obtain scale. We can support throughout the transaction, including vendor assistance, buy-side pre-deal diligence, taking control, post-deal integration and establishing strategies, to maximise value from the transaction.

To learn more or speak to one of our experts, please reach out to Alpha.

About the Authors

Gilles Gerber
Senior Manager

Gilles is a Senior Manager at Alpha FMC Luxembourg with 10 years of experience in the Asset and Wealth Management sector including 8 years with Alpha, delivering large-scale programs and projects across transformation, efficiency gains, funds migration, target operating model design and change management.

Tom Piotrowski
Senior Manager

Tom is a Senior Manager at Alpha FMC UK with 10 years of experience across the Financial Services sector, advising clients on domestic and cross-border M&A activity. Tom's deal experience spans the M&A transaction life cycle from pre-deal due diligence to post-deal integration and separation execution.

Ilia Prokashev

Ilia is a Manager at Alpha FMC UK with over 7 years of experience in the financial sector and over 4 years of consulting experience. Ilia has diverse expertise in supporting investment managers and other financial institutions in performing large-scale transformations and integrations. His last projects covered post-merger integrations, including product & customer impact analysis, carve-outs, and the adoption of emerging technologies.

Rob Gibbons

Rob is a Consultant at Alpha FMC with four years’ experience in consulting across the financial services industry. He has worked on both strategy and implementation projects for sovereign wealth funds, asset servicers, institutional banks and investment managers. Rob is part of Alpha's UK M&A Practice.