The sale of Mourant’s fund administration operation to State Street has significantly upped the profile of the Channel Islands and given the company a good springboard to expand in Europe.

State Street’s purchase of Mourant’s fund administration business in the Channel Islands has transformed the industry. The presence of such a significant player in the territory is not just a vote of confidence in the future of the Channel Islands but also signalled State Street’s intention of significantly expanding its market share in Europe.

Gary Clark, head of hedge fund services for the Channel Islands at State Street Global Services, who is based in Jersey, is under no illusions as to the importance of the sale. He confirms the Jersey operation is now working closely with State Street’s Dublin centre. “We’re migrating to their system platform and training on it. This is good news. Their technology is more advanced than ours. We will be offering middle office services as well as other services,” says Clark.

Jersey will now be a full service fund administration provider to hedge funds. This strong Channel Island presence also sets up State Street to service work overflows from Dublin and Poland as well as to “scale up” people doing the job in Jersey, notes Clark. There are no plans for making anyone redundant, confirms Clark. “I think ultimately we will need more manpower in Jersey. But this is a journey we are just starting: to learn new systems, use the capacity created by those systems and to take on more business. I think we’ll be doing that for a while before we add to head count,” Clark states. “We were a boutique before. Now we’ve gotten a real boost.”

He predicts that workflow will increase as more hedge fund business comes to the Channel Islands. He also expects State Street’s custody as well as other services to expand.

Not only does Clark expect State Street to expand its European market share but believes the fund administrator is in a better position to move into Asian markets in the future. “Given the inevitable rise in Asia, we need to be there on the alternatives side. We are now well positioned to do more globally. The bulk of clients are US fund managers at the moment but there is a desire to build up a book of business outside the US and become more global,” explains Clark.

He is confident about Jersey’s position as a strong jurisdiction to attack more hedge fund and alternatives business. “The Channel Islands is working very hard to be best positioned as a possible domicile. From the regulation perspective we’ve done a good job,” says Clark. “I think we have a very powerful offering: tax benign and well regulated. It’s a fantastic place to do business.”

For the present Clark says he is focusing on “keeping clients happy” as the team gets to grips with the new systems and technology. He believes the company will continue to cater for smaller funds. Although there are no size limits, he believes hedge funds that manage under $100 million may not be able to take full advantage of the complete service offering from State Street.

“We have quite a full service model. We are a 24-hour full-on service,” he says, noting there are plans to expand into middle office and risk services. “We are a different beast now,” he says commenting on the change. “We have increased capacity as a result of the sale.”

He believes it is an interesting time for the Channel Islands. “There is a good chance that growth will be positive. I think the State Street acquisition was a good thing for hedge funds and for the Channel Islands. We now offer a really credible service and are committed to building out the Jersey operations,” concludes Clark.