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Featured Business: Apex Fund Services
Name: John Bohan, minority owner and Managing Director, Europe and Middle East, Apex Fund Services
Employees: 60 in Ireland (Cork and Dublin), 380 globally across 34 countries
Comprehending hedge funds and funds administration services is very difficult for many people. Irishman John Bohan puts it in simple terms: it is a USD$2.2 trillion industry globally.
A fund is something that raises capital to invest in a product, he adds. And, says John, there will be a lot more interesting things going on as we move out of the crisis and people see opportunities. “People are more willing to invest when they feel the bottom has been reached.”
Apex Fund Services is a fund administration company that provides back office fund accounting, share registry (fund subscriptions and redemptions into the fund), anti-money laundering, and due diligence on clients, as well as recording all the activities of the globally based investment managers. It has 450 clients, 800-plus funds and $27 billion in assets under administration.
Then based in Bermuda, John came on board as COO in April 2004, and helped build up the business from scratch with founder Peter Hughes.
John further simplifies the work the company does in terms most companies will understand – Apex Fund Services prepares a balance sheet and profit and loss for collective investment schemes. There are many types of fund, one example of which is a pension fund in a collective investment scheme, where everyone puts their money into the one pot, and somebody invests it.
“We prepare a balance sheet and a profit and loss and we calculate independently what it’s worth on a daily, weekly or monthly basis. We report back to the investment managers and let them know what the money is worth. We’re like a watchdog, we ensure the manager is doing what they’re supposed to be doing.”
A qualified chartered certified accountant (FCCA), John worked in a practice for three years before joining Citigroup when it first came to Ireland, and then Bank of Ireland Asset Management before he moved to Bermuda two days after 9/11 where he stayed until July 2007.
When he joined Apex Fund Services it was himself, Peter, some administration staff, and a small office, with a few foundation clients and very little seed capital – they bought second-hand furniture and servers.
The model was to provide these services directly in the jurisdiction where the investment managers were, and to focus on the local markets. The strategy, John explains, was to build the company in Bermuda initially and focus on one or two emerging markets that hadn’t been tapped into. Apex Fund Services was the first fund administration firm to be authorised in the DFSC [Dubai] and also opened in Mauritius, serving the Indian market, possibly its strongest market to date.
Peter’s move to the UK in 2009 and John’s move back to Ireland in 2007 coincided with their need to have key staff in international hubs. Ireland administers 43% of the world’s hedge funds so it made sense for both to be in this part of the world.
Interview with John Bohan
What was the inspiration for setting up your business?
Peter set it up because there was a real gap in the market. In 2001, hedge funds was a market that was booming, there was a huge number of funds being set up, it was really easy to raise capital, people were throwing money at it. But it was being serviced poorly. It hadn’t evolved from a technology perspective, it wasn’t sophisticated. There wasn’t the level of risk analytics and luxury reporting that you have now. There was a real niche to service the sub-$500 million funds. The large banks were looking for the $1 billion funds and above. The $500 million and below weren’t getting the attention, they were at the back of the queue for delivery and efficiency. We had a niche to go in and provide better service and have a one-point-of-contact model.
How did you initially fund your business?
Mostly with Peter’s own money. When I came in I bought equity. There were also some silent investors who were bought out over time.
Have you diversified your offering from your original focus or set up other businesses?
The core business is very much the majority of the revenue stream for the group. We have built multiple synergistic businesses along the way. We have set up our own investment management company that is building fund platforms – plug and play platforms – that allow smaller managers (sub-$10 million) to launch their own funds quickly and easily on a low-cost basis. We’ve set up our own technology company, which is offering technology for the industry whether it’s risk or investment management tools or order management software. We’ve set up a capitals introduction business for managers to try and raise capital for their funds. We set up a middle office service. There’s probably 40 companies in total across the group.
What have been the highlights to date?
The major highlight for me was 2009. The financial crisis hit us nose on, obviously. In 2009 when we delivered our financials and we had our first loss-making year we knew at that stage it wasn’t getting any worse and we were going to make our way out of it. We knew there was a bright future ahead. That was a key moment.
What’s your favourite part of being a business owner/entrepreneur?
There’s a freedom and there’s an edge. It’s to some degree limitless; the industry is so vast and there are so many spin-offs with all these new types of regulation that there are lots of different directions you can take the business. There is a freedom that allows you to see the world and see what’s going on. You’re dealing with a wide variety of investors on a professional level – anything from $100,000 to $10 million investments. It gives you a wide spectrum of business.
How do you achieve a work-life balance?
It’s fairly difficult to do. You don’t really have a choice. The work is not in Ireland. Our investment managers are not in Ireland, they are international. There’s a huge amount of travel involved. I did 158 days of international travel last year. I did 120 days in Cork and the balance in Dublin. I do triathlons during the summer.
Are you inspired by any business figures or success stories?
You don’t need to go international for any of these success stories. Personal success stories would be the likes of Kingspan and what the Murtagh family have done. The Entrepreneur of the Year programme with Ernst & Young [Apex Fund Services was a finalist in 2012] showcases so many incredible companies.
What tools do you utilise that benefit your customers or that make running your business easier or more profitable?
We have a core technology that produces all the fund accounting we need to provide. There are about 200 reports available on that for ourselves internally. What we did was build a web portal, a website (https://www.apexfunds247.com) that our clients or investment managers can access. They can access 80-100 key reports. There’s performance reporting on the funds. Their shareholders can go online and get their statement of contract notes. It can be refreshed with live information within 15 minutes. For a lot of the smaller managers who can’t afford the level of technology required, it means they get a really strong up-to-date snapshot of the company at any time.
Do you feel you know what your customers really want? How do you stay updated with this information?
I think we do. The model has lent itself to having the managing directors physically on the doorstep of where the managers are. That’s our key advantage – if we have clients out in the Middle East, we’re not just getting out to see them two or three times a year, we’re seeing them every couple of weeks at conferences, we’re meeting them for coffee. They can call into our offices. That’s key. They tell us exactly what’s coming down the pipeline, what their investors are looking for. We very much have our finger on the pulse.
What has been the biggest challenge your business has faced?
It goes back to the financial crisis in 2008/09. It’s most definitely the biggest crisis we’ve felt. We’ve delved deeper into the tools we’re using: social media, speaking slots at conferences, trying to attract more hits to the website, PR. That was the time we invested more in those areas. A lot of businesses make that mistake, when they are cutting budgets they cut the very tools that allow them to win more business. The only way to get through this is to continually replace revenue streams that have left, or build new ones.
What do you think the biggest challenge to businesses in Ireland is at the moment?
It’s cashflow. There’s always been a mix of private and publicly available funding. The private sector needs to get back on board. We got our ”junk status” removed from a national perspective, which is huge, so we’re going to see a lot more large-scale investments coming in. That is good for the smaller investors because they know that the businesses they’re investing in will ultimately attract a larger buyout in two to three years’ time.
What part of running a business comes to you naturally?
I love the technical aspects. I love the legislation, the structuring of funds . Working with clients that are trying to work out where they should domicile the funds, problem solving with clients, interacting with the clients is what I love most. It’s the diversity of their specific or local tax or regulatory challenges that I enjoy working out with them. I gravitate towards what challenges me.
What has been the best reward in running your own business?
The underlying sense of pride in having built something. The legacy of the growth – it’s tangible, because aside from the tangibility of the value of the company there’s a tangibility with regard to the staff you interact with or, in some cases, have worked with over all that time. It’s really nice to see how successful they have become locally and the respect they have garnered from building up offices in those jurisdictions.
What was the main catalyst for growth?
That there was a perception that the industry itself – alternative hedge funds – was providing a better return than your standard mutual pension funds. So there was a huge flow of capital into that industry in the mid to late 90s right through to the 2000s. There has been a massive restructuring, but the boom is back. The flow of capital into the alternative fund industry and private equity is back to the level it was in 2006/07.
What obstacles to growth have you faced in the past?
We’re deemed an independent administrator so a lot of our competitors are banks or larger financial institutions with banking licences and billion dollar balance sheets. This means one of the obstacles is getting through the psychology of managers and investors that bigger is necessarily better. Bigger isn’t better.
How do you get ideas to further your business?
Travel helps a lot. You see in every part of the world different regulatory regimes, and financial systems that are more or less advanced in their development. Obviously with those that are less developed you have the opportunity to come in and take market share when you have a more advanced product. With those that are ahead of you, you can see what is ultimately working and what will probably come down the line in other jurisdictions. That can trigger ideas or prepare you to be ready for the next wave. It’s constantly evolving. The key drivers to change will be the margins behind the profit lines. From a global perspective, it’s going to be regulatory. You obviously have to be ready for changes to that. You have to have a structure of the industry itself and how that’s evolved. In a lot of cases that’s driven by technology.
What motivates you to stay running a business?
It’s a lot of fun. It is. Everyone needs to be challenged. You don’t want to get out of the bed in the morning unless you have something in the day that’s going to provide something of interest or a challenge to you. We all have different aspects of our emotional, intellectual or physical selves that we need to tick the boxes on. This job provides me with all of that. You have the interaction with really clever staff members across the group who are motivated and driven. You have the physical challenge to motivate yourself to catch flights in the middle of the night, get to a particular jurisdiction, hit the ground running with a full day of meetings and get back to base to try and use that information. There’s an intellectual challenge in trying to stay ahead of the game in the group.
What’s your vision for the future?
There’s so many different ways that this group can go: the investment management side, the basic fund administration we do, or technology. We have sucked up so much intellectual capital by way of new staff joining. As we do that every year, you can see what they’re bringing to the table. They’re bringing new ideas and helping grow and evolve the business. The way we see it, we have 34 offices. Now we’re ready. We feel we’ve covered the globe from a fund administration perspective, we’re primed for what we would see as a rebound. Our vision for the future is that this is just the beginning of what will be a very large financial services group that we want to go multiple ways.
Do you have a mentor; do you find this has positively impacted on your success?
I would say the closest mentor is the support you have from your family. Family has to come top of that list. Peter Hughes, who founded the company, has been an inspirational driver. The first time I met him, in October 2003, he said: “I want to grow the business but I can’t do it alone. I don’t expect you to work as hard as me but I expect you to work nearly as hard as me.”
What’s the best business advice you’ve received?
You have limited control over your revenues. Control your costs from day one. Know your costs. Focus on bottom-line cashflow because you can very quickly come to a sudden stop. A concept or an idea can be very successful but very quickly shot down if you don’t have an eye on those fundamentals.
What would be your advice to businesses starting out?
Focus on the costs and the bottom line. The concept or the idea and the potential revenue streams may be fundamentally sound but unless you’ve a realistic budget set and you’re sticking to that from day one, you won’t get access to cash to push it further when you need it.
What’s your favourite motivational business quote?
Revenue is for vanity. Profits are for sanity.
What, if anything, would you do differently?
I somewhat regret that I didn’t do a masters or an MBA. I know some of the guys who have done that feel they’ve benefited hugely. There is no rulebook you get for growing a business. But it’s been 10 years of very much on-the-job learning. I feel in some ways I would like a little bit more structure so seven years ago I could have had a better feel for how we could grow the group in different ways.
Phone: +353 21 4633366
Interviewed by: Web Content Partners
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