Aberdeen brings it all home

By Ian Fraser

European Venture Capital Journal

October 1st, 2007

Ian Fraser takes a look at how things are done at Aberdeen Asset Managers Private Equity

Just occasionally, a private equity player has such a negative experience of outsourcing its back office that it decides to bring all its administration back in-house.

This is what happened at Aberdeen Asset Managers Private Equity, which outsourced its administration to BNP Paribas in Glasgow in October 2000. The move followed parent group Aberdeen Asset Management’s £150m acquisition of Glasgow-based fund manager Murray Johnstone.

“The decision was made to bring it back in-house because it simply wasn’t working,” he says. However, Kennedy says the back-office support functions on Aberdeen’s investment trusts, unit trusts and institutional funds have remained with BNP Paribas.

Kennedy adds: “Outsourcing works fine for those sorts of things, but it works much less well for private equity funds. It can work, especially if you build strong relationships, and if the communications are good. But there can be real problems if there are lapses of communication, for example when the private equity manager neglects to tell the outsourcer something The blame is not always with the outsource provider!”

There are benefits to outsourcing. For example, if dealflow is unpredictable in terms of timing (….)

Kennedy says that, from his perspective, one of the biggest advantages of handling accounting and fund administration in-house is that his seven-strong team “sits right beside the [investment] team, which inevitably leads to better communications.”

He adds: “Another advantage is that the in-house team is focused purely on those internal funds, can gain expertise on them and staff are not always having to cover for funds or clients  – which can happen when things are outsourced. Priorities are just different.”

(….)

This is an excerpt of an article published in EVCJ’s Support Services Supplement in October 2007. To read the full article you need to subscribe to EVCJ.

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