24/08/2011 Author: Will Wainewright

BlueCrest admin move is a “landmark deal” for HSBC

BlueCrest Capital Management’s decision to appoint HSBC Securities Services to provide fund administration services, exclusively revealed on HFMWeek.com this week, has been described as a “landmark deal” by an insider at the bank.

The $26.8bn hedge fund, one of the biggest in Europe, expects to switch at least one fund from existing provider GlobeOp in the next six months. London Stock Exchange-listed GlobeOp’s share price fell sharply on Monday in the wake of the news.

The development marks a significant business win for HSBC, which was ranked eighth in HFMWeek’s single manager AuA survey with $120.36bn assets under administration (AuA). It is not yet known which or how many funds they will take on, according to someone familiar with the situation.

The project is currently at a planning stage from a technical and procedural aspect, said the source, who described the process of adding another administrator as a “significant project.”

BlueCrest’s decision, taken after recently completing a tendering process following a review of its fund administration services, appears to have been driven by a desire to diversify its administrator base.

The fund will continue to work with GlobeOp, whose AuA stood at $170bn at the half-year mark, inclusive of all hedge fund assets. The company is believed to administer around 20 funds for BlueCrest, although analysts described Monday’s fall in the administrator’s share price as an “overreaction.”

“It appears to me that BlueCrest wants to scale up in terms of size and are diversifying their service offering. I would call the development a complication for GlobeOp but no worse,” said Keith Baird, an analyst at Oriel Securities, after GlobeOp ended Monday down almost 9%.

“I think the market sell-off has been a big market overreaction. There has been a bit of a lack of information, and the selling has been worsened by the current climate we’re in.”

Neither BlueCrest nor HSBC would comment officially on the move when approached by HFMWeek. GlobeOp CEO Hans Hufschmid said he could not comment on the story as it involved a client. “All I can tell you is that we have a very good relationship with them,” he said.