British Virgin Islands fund administrators comprise a number of independent players specialising in servicing small and mid-sized hedge funds with an emphasis on tailored solutions and client service.

The British Virgin Islands (BVI) is not home to any of the big-name fund administrators such as Citco, State Street, BNY Mellon or GlobeOp. This is attributed in part to the lack of any requirement for BVI funds to have a local administrator.

The large administrators have offshore bases in the Cayman Islands and Bermuda and see no reason to open offices in the BVI.

The absence of an internationally recognised administrator in the BVI means much of the big-ticket business flows out of the jurisdiction. The largest BVI-based funds are administered onshore or in locations like Cayman and Ireland. It is estimated that less than 10% of the assets managed by BVI-domiciled hedge funds are administered locally.

BVI fund administrators such as Folio Group, ACE Fund Services, Beacon Fund Advisors and ATU Fund Administrators may not have instant name recognition but they do have a reputation for providing high quality services and are staffed by experienced fund professionals.

Folio Group is the largest administrator in the BVI with around $3.5 billion in assets under administration (AUA). The company’s focus is on administering BVI-domiciled funds. These account for around 80% of its client base with the remainder comprised of funds registered in the Cayman Islands, the US and Anguilla.

Folio was established in 2001 in response to demand for locally based fund administration services in the BVI. The company saw its AUA increase steadily over the years through a mix of organic growth and referral business until the industry hit a road bump in 2008.

“Our aim from the beginning has been to provide a better level of service than our competitors. We believe we offer a good service to small and mid-sized funds that are not being properly serviced by the larger administrators,” says Daniel Cann, a director at Folio Group.

Folio’s clients are mainly smaller hedge funds that fall below the minimum AUA requirements of the big administrators. These funds typically cater to high net worth individuals (HNWIs) and family offices rather than institutional investors.

This segment of the market came under pressure in the aftermath of the financial crisis. Folio saw its AUA decline as a result. Cann now sees plenty of reasons for optimism going into the second half of 2010.

“We have seen the start-up business come back this year,” he says. Folio has won mandates to administer a number of private wealth and HNWI funds that are launching with $10 million to $25 million in assets, according to Cann.

“The big administrators may not be interested in this business but it is our bread and butter,” says Cann. “These funds only have a handful of clients and they are not particularly complex. We can service them very efficiently and still be profitable,” he says.

Folio’s expertise is working with emerging managers and helping them navigate the early years in business. “We are entrepreneurs ourselves. We are happy to help managers through the setup and structuring process without charging an arm and a leg,” says Derek King, managing director of Folio Group.

This willingness to be a partner to emerging managers has brought its own rewards. Fund managers have stuck with Folio as they have grown and the company has a stable and loyal client base. “We have a very solid foundation,” says King. “Every fund we take on from here is a bonus. We are the largest administrator in the BVI and we have strong reputation but we also remain nimble, flexible and open to working with all types of funds.”

The team behind Folio have lost none of their entrepreneurial spirit. Earlier this year they established a joint venture with International Trust, one of the largest trust companies in Malta. Folio-ITL Fund Services will provide fund administration services to funds domiciled in Malta and other ­European jurisdictions.

The move to Malta was made with an eye on the future, says King. “We can administer European funds and feeders into the BVI as well as Ucits funds from Malta,” he says.

Folio has also launched Fiduciary Group, an affiliated director services company which began operations in 2010. “We have always offered directorships to our administration clients but we saw more demand for these services on the back of new regulations here in the BVI and changes in the business environment overall,” says King.

Perhaps the best-known fund administrator in the BVI is Conifer Fund Services, part of the Conifer Group. With roots that go back to 1989 and offices in San Francisco and New York, Conifer is an established player in the hedge fund industry and has a strong following among small and ­mid-sized funds.

Conifer provides a suite of services for hedge fund managers that includes fund administration, middle office outsourcing, prime brokerage, trade execution and business management and operational support.

Earlier this year the company decided to consolidate its fund administration services for clients on the US east coast in its BVI offices. Hedge fund managers based on the US west coast are generally serviced from Conifer’s headquarters in San Francisco.

This makes Conifer’s BVI business somewhat unusual. Its biggest clients are onshore funds based in the US. Of its offshore clients, around 75% are domiciled in the Cayman Islands with BVI funds accounting for the balance.

The BVI office of Conifer was established in 2006 by a team of former executives from Hedge Fund Services, a BVI administrator acquired by Fortis in 2005. Conifer Fund Services currently has a team of 19 employees in the BVI administering around $3 billion in hedge fund assets. The company has a combined total of $7 billion in hedge fund AUA across its operations in San Francisco and the BVI.

Conifer is poised for growth in the BVI. The company recently leased additional office space in Tortola and staff numbers could double over the next five years, says Peter O’Connell, managing director of Conifer Fund Services in the BVI (pictured).

“Fund administration is a core business for Conifer Group. We think the outlook for this business has improved markedly since the turn of the year and a number of new clients have come on board in recent months,” says O’Connell.

He concedes the business environment for start-up hedge funds remains challenging. However, he says launch activity is picking up. “People are taking more time to plan and they are finding it harder to raise launch capital. But on the flip side, the launches that do get off the ground are of a very high quality,” says O’Connell.

Conifer has also carved out a niche servicing asset owners who require shadow accounting services for their hedge fund portfolios. Conifer provides fund administration and reporting services for large and mid-sized university endowments with direct hedge fund investments. It also provides consolidated reporting for a large hedge fund seeder in New York.

The demands on fund administrators continue to evolve, notes O’Connell. “The monthly processing cycle is fading away. Daily reconciliation and risk and attribution reporting are becoming the norm. Fund administrators need to invest continuously in technology and people and improve operational efficiency in order to stay competitive,” he says.

Conifer has been doing just that. The BVI office is in the process of upgrading its portfolio accounting software to Advent Geneva from the legacy Axys system. It has also completed a SAS 70 Type II certification of its internal operations and controls.

Conifer also recently took over the fund administration operations of a BVI law firm after it decided to exit the business. O’Connell says the move reflects Conifer’s positive outlook on the business in the BVI. “We feel confident in our ability to grow the business because we have strong technology and people,” he says.

VP Fund Solutions, the fund services unit of Liechtenstein’s VP Bank, is another established player on the BVI fund administration scene. VP Fund Solutions has had a presence in the BVI since 1998 through its wholly owned subsidiary, ATU ­Fund Administrators.

The ethos at ATU is to provide a personalised and specialist service to hedge fund clients, says head of fund administration Sebastien Tatonetti. “We only employ chartered accountants in the fund administration business. An experienced and qualified accountant is assigned to every fund and they are responsible for servicing that client,” he explains.

VP Fund Solutions works with hedge funds of all sizes. The typical client is a start-up manager with $5 million to $100 million in assets under management, says Tatonetti. The range of services provided by the company encompasses fund structuring, incorporation and custody services provided through VP Bank, in addition to fund administration.

VP Fund Solutions also provides fund incorporation in the Cayman Islands and Anguilla through its BVI office. The company services onshore funds through offices in Luxembourg and Liechtenstein.

ACE Fund Services and Beacon Fund Advisors round out the list of companies with dedicated fund administration operations in the BVI. Launched in July 2008, ACE is part of Panama-headquartered legal and professional services group Patton, Moreno & Asvat which has been active in the BVI for many years. The fund administration business was launched as a value-added service for existing clients of the group with fund structures in the BVI.

ACE is focusing on picking up business from hedge fund start-ups and incubator funds seeking a cost-efficient independent administrator, says Mara Alido Spencer, head of ACE Fund Services.

The BVI is also home to a number of well-known administrators which use the jurisdiction as an offshore base. UK headquartered IFINA and Netherlands-based Circle Partners have offices in the BVI, although most of the substantive administration work is done in their ­onshore locations.