Two firms that provide administrative services to funds, Ultimus Fund Solutions and HedgeServ, are seeking new investors as the dealmakers wait for mergers to rebound.
In the first transaction, Ultimus, which is backed by private equity firm GTCR, has hired advisors to run a process, according to four banking sources. Ultimus produces $90 million to $100 million Ebitda and could sell for 20 times Ebitda or $2 billion, the people said.
In 2018, GTCR, a Chicago buyout shop, separately acquired Ultimus Fund Solutions and the Gemini Companies. It combined the two businesses and called the company Ultimus Fund Solutions, a provider of fund administration, accounting and investor solutions to traditional and alternative fund managers. Ultimus then scooped up LeverPoint Management in 2019 and, in 2021, it bought FD Fund Administration, which boosted assets under advisory, or AUA, to over $400 billion.
Ultimus is one of the biggest independent fund administration providers with over 450 clients and more than $500 billion in AUA.
GTCR is a well-known fintech investor. Last year, GTCR completed its $18.5 billion buy of a majority stake in Worldpay Merchant Solutions from FIS. More recently, in January, the PE firm invested in life insurance broker Winged Keel Group and acquired Concord Servicing, a loan servicing software provider, in separate transactions.
The Ultimus sale comes as dealmakers are predicting mergers will increase in 2025 with the return of Donald Trump, who was sworn as the 47th U.S. president last month. An expected rebound would help private equity firms which have had a hard time selling assets and returning money to investors. Buyout funds were sitting on 28,000 unsold companies worth a record $3.2 trillion, according to a Bain 2024 Global Private Equity Report.
January, however, remained slow for M&A. So far this year, the number of global announced mergers dropped nearly 43% to 2,342 transactions totaling $263.3 billion as of Feb. 4 compared to the same time in 2024, according to data from Dealogic. The $263.3 billion, however, represents a near 2% bump in transaction value. The deal count for January is likely to rise in the coming weeks, as clients continue to submit deals after the end of the year rush, a Dealogic executive said.
HedgeServ stake on the block
In a second transaction, HedgeServ is also seeking investors, according to three banking and industry sources. Aquiline Capital Partners is looking to exit its investment in a deal that would value HedgeServ at more than $1 billion, it said.
HedgeServ provides a range of solutions including accounting, middle and front office, and regulatory, compliance, and tax services for private equity, hedge funds, endowments, managed account platforms, and family offices. HedgeServ’s AUA is currently over $500 billion and is expected to exceed $600 billion by the end of its fourth quarter, one source said.
Aquiline’s investment in HedgeServ dates back to 2009, when the New York PE firm acquired a minority stake.
A prior version of this story said that Aquiline was seeking more than $1 billion for its stake. The more than $1 billion is the valuation for the entire firm. The story has been changed.
