Martin Smith

Apex Group Ltd. (“Apex” or “the Group”), a global financial services provider, has been confirmed as the successful bidder in the acquisition of Mainstream Group Holdings Limited (ASX:MAI) (“Mainstream”).

On June 28, 2021, the Board of Mainstream announced acceptance of Apex’s offer of AUD$2.80 cash per share by way of a scheme of arrangement. Apex’s offer implies an enterprise value for Mainstream of approximately AUD$415 million, including transaction costs and net debt. The competing bidder declined to exercise its matching right to match or offer more favourable terms.

Accordingly, Mainstream has given a notice of termination under the Scheme Implementation Deed (“SID”) with the previous competing bidder. Mainstream has now entered into a SID with Apex and the Mainstream Directors unanimously recommend that shareholders vote in favour of the Apex scheme of arrangement (in the absence of a superior proposal and provided that an Independent Expert’s report concludes that it is in the best interests of shareholders).

With the addition of Mainstream, Apex will have 50 offices worldwide, close to 5,000 employees, and servicing nearly US$1.4 trillion in assets across administration, depositary, custody and under management, Apex delivers a full suite of services to asset managers, family offices, financial institutions and corporates.

The transaction is subject to customary conditions, including approval by Mainstream shareholders, the relevant Australian court and certain regulatory approvals, and is expected to close in the fourth quarter of 2021.

Peter Hughes, Founder and CEO of Apex Group comments: “We are pleased to announce our successful bid for Mainstream which was made on the strong belief that Apex would provide the best platform for the company’s continued success and expansion. At Apex, we are committed to continually enhancing our single-source model, and this acquisition would expand our ability to support new and existing clients across all aspects of their business with an enhanced product offering – no matter where they are in the world.”

Martin Smith, CEO of Mainstream adds:” We are delighted to recommend that shareholders vote in favour of the Apex scheme of arrangement. In addition to representing excellent shareholder value, the proposed acquisition would provide Mainstream clients with access to a significantly broader range of solutions and technology investment via Apex’s global network. Apex has successfully integrated a number of strategic acquisitions in recent years, with 99% client retention rates, and we anticipate a similar outcome for Mainstream. We see an acquisition by Apex as beneficial for our clients, shareholders and employees.”

Mainstream is being advised by Miles Advisory Partners as financial adviser and Maddocks as legal adviser.

Apex is being advised by Macquarie Capital as financial adviser and Herbert Smith Freehills as legal adviser.

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Martin Smith

Mainstream Fund Services has seen a strong uptake of the new Quoted Funds structure by fund managers and their retail investors.

A Quoted Fund allows retail investors to buy and sell units on the ASX alongside the traditional fund application and redemption process. It represents the convergence of listed and unlisted structures into a single fund. Mainstream has invested heavily in this industry first to create a single registry system for Quoted Funds.

Australia’s first Quoted Fund, the Airlie Australian Share Fund (ASX: AASF), went live in June 2020. In the six months to 31 December 2020, a further two Mainstream administered Quoted Funds went live, one of which is a single trust with a closed class and an open class.

The advantage of having a quoted open class is that an investor can apply or redeem for units directly with the fund’s unit registry or via their broker.

In the three months to 31 December 2020, Mainstream saw the number of investors it services increase from 86,033 to 157,066 investors and its Funds under Administration grow by $14 billion to $225 billion, mainly attributable to Quoted Funds. In total, 78,503 investors, or 50% of the investors serviced by Mainstream, were invested in a Quoted Fund as at 31 December 2020.

Martin Smith, Chief Executive Officer of Mainstream Group Holdings Limited, said “Recent activity has proven this fund structure is taking off by creating greater efficiency in the managed fund industry. An investment manager can now access both listed and traditional fund distribution channels through a single fund structure via Mainstream’s single registry structure. This in turn opens up greater choice and efficiency for investors. There is a high level of interest from managers looking to offer their investors the opportunity to invest directly or via the ASX.”

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Justin Howell

Mainstream Group Holdings Limited (ASX: MAI) announces that Pendal Group (ASX: PDL) (“Pendal” or “Pendal Australia”) has entered into a five plus five year agreement with Mainstream Fund Services to provide outsourced registry services. The decision follows a competitive tender process, with the transition project commencing May 2020.

Under the arrangement, Mainstream will provide registry services for Pendal’s Australian funds with approximately $19 billion^[1] of assets under management.

The arrangement will provide Pendal with Mainstream’s existing operating model for other large fund managers, including deployment of automated workflow for email and paper transactions, online transacting, XPLAN reporting, Calastone, banking automation and the newly created Quoted funds functionality.

Pendal is an independent, global investment management business with $86 billion in assets under management^[1] and a focus on delivering superior investment returns for their clients through active management.

The annual contracted fees will be approximately 6% of Australian revenue and 3% of group revenue for Mainstream. The appointment signifies the third pillar in Mainstream’s key client strategy and means Mainstream now has long term contracts with three of Australia’s largest asset managers.

Mainstream Chief Executive Officer Martin Smith commented: “We are proud to support a client of the size and calibre of Pendal with our scale and experience in registry services. We have made significant investments in our registry services over the last 3 years and look forward to partnering with Pendal to drive automation and the investor experience.”

Justin Howell, COO at Pendal Australia, said “We were impressed with the robustness of Mainstream’s registry solution as well as the calibre of their clients. We are focused on minimising risk while improving our operational efficiency and enhancing our investor’s experience. We look forward to working with Mainstream to achieve this.”

The transition of Pendal’s register of unitholders from its existing service providers will require a very close working relationship between Mainstream and Pendal over the coming months. Completion is expected by March 2021.

This ASX Announcement has been authorised by the Board of Directors.

——–

¹ As at 31 March 2020.

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Martin Smith

FundBPO Pty Ltd (FundBPO), one of Australia’s leading independent fund administrators, has appointed wealth management software specialist DST Systems (DST) to implement the Company’s enterprise workflow solution via a five year license agreement.

FundBPO is the first business around the globe to take up DST’s new Transfer Agency (TA) solution, which combines the Company’s business process management platform AWD® with pre-configured global best practice TA processes developed from DST’s own business process outsourcing operations for managing TA transactions.

The solution will initially be rolled out across FundBPO’s Australian unit registry (transfer agency) operations to bring global best practices to clients including Equity Trustees, Grant Samuel Funds Management, SG Hiscock & Company and Smarter Money Investments.

Martin Smith, Chief Executive Officer, FundBPO, said “FundBPO is experiencing strong growth in our Australian business and we are committed to investing in technology that gives our clients better management of the risks associated with processing managed fund transactions, enquiries and correspondence.”

FundBPO is a service provider to more than 370 managed funds in Australia, administering more than $95 billion of domestic funds. Within the outsourced managed funds administration market FundBPO provides all outsourced services required of an Australian fund manager.

“This solution will allow us to implement global best practice processes while driving significant efficiency gains across our business. We will be able to run a paperless unit registry business with real-time service level reporting, client interaction and management of a fund’s transaction life cycles. To quantify this, the 9,000+ faxes, letters and emails we receive from investors each month will be integrated and indexed in AWD, improving turnaround times and increasing transparency and process controls for our clients.” Mr Smith added.

Over time FundBPO will look at extending AWD’s workflow capability to its other geographies and business units, given AWD’s potential application to follow-the-sun processing, unit price and distribution sign-offs and financial statement preparation.

FundBPO has a long-standing relationship with DST through the use of their HiTrust software for its Australian unit registry business.

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Martin Smith

Multi award-winning boutique fund manager SG Hiscock & Company has appointed FundBPO as the new fund administrator and unit registry provider of its Australian equities and property securities funds.

Under the arrangement FundBPO will provide fund administration and registry services to 16 SG Hiscock funds and more than 2,900 investors. The funds all follow the manager’s high-conviction active management approach and include their highly regarded Australian and global REITS (Real Estate Investment Trusts).

SG Hiscock Chairman and Managing Director, Stephen Hiscock, said the decision followed a comprehensive review of the $2.8 billion manager’s fund administration services and marketing.

“We were looking for an administration specialist with market leading capabilities that will further invest in developing future proficiencies for our investor services. We assessed FundBPO as the ‘best fit’ administrator for the current and future needs of our funds.” Mr Hiscock said.

FundBPO will support SG Hiscock’s funds by packaging its registry service, which went live this week, with unit pricing and fund accounting to provide a holistic back office solution. FundBPO is also providing the boutique investment manager with its own branded retail and institutional unit registry investor site as well as an integrated service for mFunds, XPLAN reporting and Calastone.

“FundBPO’s recent experience with large-scale complex transitions gave us confidence in their ability to grow with our funds. We expect their support, alongside our new revamped website which also went live this week, to enhance the service we can offer our investors.” said Mr Hiscock.

Martin Smith, Chief Executive Officer of FundBPO, added “FundBPO is pleased to welcome SG Hiscock as a client. Being selected by such a high calibre manager confirms our strong positioning in the fund administration and unit registry market. We work hard to understand market needs and develop tailor-made solutions for our clients.”

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