Private-equity funds can outsource their grunt work

Specialisation has become the byword for trust companies. Orangefield Trust is no exception: it is building a niche providing administration for private-equity firms, with a focus on Asia and global emerging markets.

Orangefield is the restructured entity once known as ING Trust, which in July 2007 was bought by Foreman Capital, a Dutch investment group, and ING TrustÆs management.

The buyout accomplished, its senior executives then decided their best opportunity for growth was to diversify beyond its core businesses of fiduciary and trust services into fund administration for private-equity funds, real-estate funds and to some extent hedge funds, with an emphasis on business in major emerging markets such as China, India and Brazil.

Charles Kwun joined in December as managing director for Asia. Based in Hong Kong, he will be responsible for business development in the region. He previously ran the Mandatory Provident Fund business of Bank of East Asia.

The fund-administration business brings a stable, visible cash flow, explains Eelko Bronkhorst, OrangefieldÆs Amsterdam-based CEO. Bronkhorst has a long banking career with ABN Amro, including a decade in Asia that included stings in Jakarta, Seoul and Singapore.

ôMost of the Asian private-equity business invests in China and India,ö he says. ôThese funds want to structure their investments in an efficient way.ö

Private equity or real-estate investors tend to operate out of small teams based in a central location, and canÆt afford to have multiple offices in investee countries. For example, funds investing into India may do so from Mauritius, thanks to its double-taxation treaty with New Delhi.

Orangefield has an office in Mauritius that can run the investment company there, handling tasks such as documentation and reporting for legal, accounting and other regulatory purposes, as well as managing the companyÆs annual records, reporting board resolutions and the administration around any investment decisions.

To improve its Asian capabilities it is also preparing to open an office in Singapore as well as acquire a fund administration company that is based in Asia and already specialises in private-equity businesses. Bronkhorst declined to name the target company.

ôWe see investment flows between developed and emerging markets have changed,ö he says. Five years ago, four times as much money was invested into emerging markets as the other way around. Now itÆs less than two times and will soon hit parity, particularly with sovereign wealth funds snapping up distressed investment banks. ôWe want to position ourselves to follow the investment streams,ö Bronkhorst says.

Orangefield has a number of other ambitions tangential to fund administration. It wants to expand its business outsourcing capabilities for European corporations that need, say, to shift work in areas such as accounting to places such as India. And it is now getting a trust license in the British Virgin Islands û a popular haven for wealth among rich Asian families û in order to help sources of private wealth structure their estates in offshore locations.