Luxembourg-based Alter Domus, one of the world’s biggest asset services firms, has secured a new strategic investment from London-based private equity firm Cinven. Alter Domus said the transaction will increase its value to 4.9 billion euros, which indicates that Cinven agreed to pay the firm’s existing shareholders - its founders and Permira - more than half of that amount.
London-headquartered Cinven beat out rival bids from TPG Inc. and Hellman & Friedman, both headquartered in San Francisco, according to financial news reports. TPG had earlier emerged as Alter Domus’ highest bidder, having submitted a bid that would have valued the firm at the lower amount of 4.5 billion euros.
Existing shareholders
Existing shareholders, including the company’s founders and London-based private equity firm Permira, will sell about half of their shares to Cinven but still retain a significant investment in Alter Domus.
The deal will commit Cinven to supporting Alter Domus’ long-term strategic growth, the company said. Cinven will work in close partnership with the founders of Alter Domus and Permira, who will still be significant shareholders.
“With an enviable track record of investing in fast-growing, world-class businesses, we are thrilled to welcome Cinven as an investor in Alter Domus,” said Alter Domus Chief Executive Officer Doug Hart in a statement. “Together we look forward to further accelerating our international growth and delivering innovative new services to our clients.”
Large global fund administrator
Alter Domus was founded in 2003 by former PwC partners including René Beltjens, who currently chairs its supervisory board. It has grown into one of the world’s largest fund administrators, with over 2.500 billion euros in assets under management. It has built a global network now spanning 23 jurisdictions, and according to the firm, it services 90 per cent of the top 30 asset managers globally.
The firm has since 2021 increased revenue by 54% and grown assets under advisement by 69%.
Fund services subsector
The new investor, Cinven, reports that it “has spent significant time targeting investment opportunities in the fund services subsector, given its attractive and resilient characteristics, underpinned by structural growth in the alternative assets space.”
“Fund services has been a priority subsector for Cinven’s Business Services team for some time due to the attractive business model characteristics and strong growth drivers,” said Rory Neeson, partner and head of Cinven’s business services sector team. “We have followed Alter Domus closely over many years and admired it as a global leader with blue-chip clients and leading service levels.”
Alter Domus has come under the regulatory scrutiny of Luxembourg’s CSSF. For example, at the end of 2021, the regulator fined the firm 174,000 euros for its role in the collapsed Columna Commodities fund.
Regulatory scrutiny
That fund went into liquidation in 2017, a year before its manager, Luxembourg Fund Partners (LFP) was sold to Alter Domus.
The failed Columna Commodities fund is a disputed topic in Luxembourg and still is subject to a court challenge in which the CSSF also is involved.
The firm has become one of the leading registrants of Luxembourg reserved alternative investment funds. In a recent Investment Officer Luxembourg analysis, the firm was responsible for 24 Raifs and sub-funds during 2023.