Morning all, Craig McGlashan here with the Europe Wire from the London newsroom.
The world of asset servicing has a special place in my heart – my first job in financial journalism was writing about the topic. It seems now that the sector is occupying a similarly prevalent position in private equity firms’ eyes – or at least their portfolios. This morning, we take a look at what’s attracting GPs to the sector, with a particular focus on fund administration.
Next, we have a deal in another area that commands a lot of my attention: soccer. We’ve got the valuation for you as Apollo agrees to take control of Spanish giant Atlético Madrid.
‘On a tear’
Once upon a time I edited a magazine dedicated to the world of asset servicing – fund administration, custody, securities lending and all that back-office stuff that doesn’t tend to hit the headlines but is no less important than what goes on front of house.
Private equity is not only a client for these services – dealmakers are keen on adding asset servicing providers to their portfolios, as PE Hub’s Nina Lindholm writes this morning.
Nina turned to industry professionals to learn what makes these business models appealing, why the European market, in particular, is drawing investment and where the hotspots for the popular niche of debt servicing deals are.
In the Wire, I want to focus on what Nina uncovered about fund administration, which has been one of the most popular asset servicing sub-segments, boosted by the tailwinds in the alternative asset management industry. So much so that Permira’s exit last year from Alter Domus, a fund administration and corporate service provider for the alternatives sector, won PE Hub’s Large-Cap Europe Deal of the Year in March.
Editor’s note: To have your say on who should win PE Hub’sDeals of the Year for 2025, head on over to the call for nominations page.
Permira invested in Alter Domus in 2017. “This sector has since been on a tear and it’s really re-rated to high teens, if not multiples in the 20s,” Philip Muelder, partner and head of services, told me around the time of the exit.
“It is valued in line with data and information services, high-quality tech-enabled services and financial software businesses with strong recurring revenues and unit economics, resilient market exposure and structural tailwinds.”
The PE firm is not done with the segment. Yesterday, it reached an agreement with London-listed JTC, a global fund administration and corporate services group, to take the company private for an enterprise value of £2.7 billion ($3.6 billion; €3.1 billion).
Inflexion is another PE firm transacting in the sector – its portfolio includes Ocorian, a corporate, fund and fiduciary services provider, and Audaxi, a tech-enabled corporate services provider. PE Hub was the first to report Ocorian’s add-on of the Chicago-headquartered Fund Solutions division of Element 78 Partners in June.
Fund admin is an area Inflexion has invested in “significantly” and the firm’s appetite has not waned, Andrea Bertolini, partner and head of financial services, told Nina.
“These are very resilient business models,” said Bertolini. “Once you outsource your admin to a third party, it’s very sticky, because it’s a big headache for a fund to change their administrators.”
Recurring revenues in the asset servicing segment can reach the high 90s, according to London-based Bertolini. Organic growth rates for good businesses are around 15-20 percent, particularly if a firm has exposure to the US, not just Europe, he explained.
Private equity fund administration has increased “massively” over the last few years, according to Bertolini, who added that there is still a long way to go.
“With other businesses, such as management company compliance outsourcing, penetration has also increased, but it’s far behind the fund admin space,” he said. “We see more potential there.”
Check out the full article to learn why US money is coming into the European sector and why Europe has a great backdrop for investing in debt servicing companies.
Sporting developments
Speaking of US investment in Europe, Apollo is making a major acquisition in European soccer, after agreeing to become the majority shareholder in Spain’s Atlético Madrid. The deal values the club at more than €2 billion, according to sources close to the matter.
The deal is via Apollo’s sports investment company Apollo Sports Capital, which launched in September.
ASC will aim to enhance the club’s “financial strength, sporting competitiveness and community impact,” according to a release.
Details include investment in Atlético’s teams and in infrastructure projects, including the development of the Ciudad del Deporte, a new sports and entertainment district.
Atlético is in fourth position in this season’s La Liga, the top tier of Spanish football, having finished third last year. It has been Spanish champion 11 times, placing it third in the all-time list behind local rival Real Madrid and Barcelona.
The deal is expected to be completed in the first quarter of 2026. Ares Management, which already had a stake in the club, will be among the minority shareholders.
There seems to be little limit to US private equity’s growing interest in European football. Just last week, Cynosure | Checketts Sports Capital invested in ALK Capital’s soccer operations.
ALK is the owner of Atlético’s La Liga rival Espanyol as well as Burnley in the English Premier League.
That’s a wrap for today. Obey Martin Manayiti is in the US chair later today and I’ll be back with you from London tomorrow morning.
Cheers,
Craig