Global financial group Apex Group, firmly anchored in the Luxembourg fund hub with brands such as FundRock, LRI Invest and depositary bank EDB, continues to add to its string of acquisitions and partnerships around the world. Peter Hughes, founder and CEO of the Bermuda-based firm, lays out his long-term vision to Investment Officer. “The world’s largest asset managers need fully connected, comprehensive solutions, offering all they need.”
Each new acquisition and partnership announcement marks a waypoint on Apex’s long-term strategic journey. That journey still has some way to go, said Hughes. “In terms of what the potential is, half-way certainly feels about right.”
The Grand Duchy, with its multi-lingual and multi-jurisdictional expertise, has served as inspiration for Apex’s global business model, Hughes explained in an interview. In the worldwide asset services market that Apex targets, Luxembourg plays a key role when it comes to delivering on the firm’s vision of creating a global network.
“What we’re looking to do is really replicate the model we have in Luxembourg, which is the whole ecosystem of what people would outsource and replicate it in as many different countries as we can,” said Hughes. “Because we know people want to have that fully connected solution delivered by a credible vendor, with all the best technology.”
Replicating Luxembourg’s model
The firm’s acquisition strategy seeks to build, as it were, copies of the Luxembourg ecosystem in other regions. “We try to replicate what we’ve done in Luxembourg in other places so that asset managers, or global asset managers operating in multiple jurisdictions, can get the same solution delivered from the same business in the same way, in multiple places. So that’s what our model is about.”
Hughes founded Apex in 2003 in Bermuda, where the firm now has a team of 50 people, and a global staff of 10,000. A first decade of organic growth took the firm to 35 offices around the world. Apex’s next development phase, growth through acquisitions - now is well underway.
Most recently, the firm added Maitland to its list of businesses acquired, following the acquisition of US tax services firm FTS in April. With Maitland, also present in Luxembourg, Apex expands its geographical footprint in South Africa while adding 475 employees. Apex’s FundRock recently received regulatory approval in the Netherlands to open an office in Amsterdam. And just last week, Apex announced plans to take over Malta-based ZAS, a specialist provider of regulatory compliance and risk management services.
Backed by Genstar Capital
Delivering Hughes’ vision of building a global powerhouse in asset services does not come cheap. Financial backing is provided by San Francisco-based Genstar Capital, who have remained majority owners alongside Hughes and the Apex management team after TA Associates, Mubadala and Carlyle became minority shareholders in a transaction that closed last month.
Since Genstar became involved in 2017, Apex’s assets under administration have surged from 80 billion dollars to, upon close of recent acquisitions, approximately 2.75 trillion dollars in assets serviced across administration, custody, depositary and under management.
IPO as exit strategy
Hughes affirmed that the long-term vision for Apex sees an IPO as an exit strategy for his investors and to help his business transition to the next phase. “Certainly that’s my goal, in order to transition the business to the next phase, in the medium to long term, to become a public company,” he said. “So the commitments we make to our clients and staff now, and the strategy and model we have, can be perpetuated, post becoming public. I do see that as a very effective way of making sure that the quality we bring today remains.”
“We are very focused on making sure that our reputation leadership is maintained well into the future. So we’ve got a clear 10 year runway of building this business in the right way. And that includes an IPO probably at some point in that period.”
Internal mobility to address Luxembourg talent gap
The business has been leveraging its global employee base to address talent gaps in the Luxembourg market. “Competition for talent in key locations such as Luxembourg has led us to think differently about how we fill critical roles– with a much greater focus on internal mobility than we have seen at Apex before,” Hughes added.
Setting up 35 offices around the world “takes a lot of effort when you’re doing that organically,” said Hughes. “And then the next phase is to buy good businesses which complement each other. You’re really adding strength and depth in your product offering each time you’re buying a business.”
“The last five years has been about trying to create the biggest product set for asset servicing,” he said, adding that most acquisitions are judged by their potential to “complement the Apex brand, in terms of culture and message.”
‘More than just be a good business’
Hughes underlined that his approach is not just about building a good business, but also about providing solutions. “Good businesses do more than just be a good business. They are making positive change, whether it’s in people’s lives or for the climate or other things.”
In this regard, Apex aims to become a carbon neutral business by offsetting its lifetime of carbon emissions. “With our global platform we feel we have a responsibility to do the right thing and we therefore continually strive to be a responsible corporate citizen, focused on making a difference to our people, our planet and our society,” Hughes said. “We are committed to positive change and being a force for good in both the way we conduct business, and by setting an example.”
“So we are making sure that we’re trying to have the best solutions from a technology point of view, which means you have many different choices for clients rather than just thinking of one solution that will be fit for every client,” he said. “Ultimately the brand is all about the Apex Group, trying to be the best business we can be and making a positive impact on everything around our business.”