BNP Paribas Gets into 40 Act Business with Janus Henderson Deal

Last month, Patrick Colle, chief executive officer of the French bank’s Securities Services division, told WatersTechnology that the one piece of the puzzle it was still missing was coverage for the 40 Act fund administration space, adding that an acquisition “should be coming out pretty soon.”

Well, wait no more. The custodian bank has announced that it is acquiring Janus Henderson’s 40 Act unit, which consists of approximately 120 employees. This unit will handle middle- and back-office functions covering US regulated fund products, says Andrew Dougherty, Americas head of asset managers and alternative investors for BNP Paribas Securities Services.

“This unit for us will become our operational hub for US-regulated-fund products,” he says. “We have been in the alternative space for non-regulated funds for quite some time. In the US, we built our presence through acquisition, as well—in 2015, we acquired the alternative fund servicing unit of Credit Suisse. So this [acquisition] is really a focus on US 40 Act funds because that was the missing operational capability that we didn’t have.”

BNP Paribas had served as Henderson’s core service provider for over a decade. After the merger of Janus Capital and Henderson group, it presented an opportunity for BNP to grow its offering while creating a bond with legacy Janus.

“It was a perfect match, if you will, of being able to work together to not only see how we could solidify our partnership with Henderson going forward on a global basis, but also pursue a transaction where we could acquire from legacy Janus the capabilities that they had built out over the years,” Dougherty says.

BNP Paribas will pay Janus Henderson a net consideration of approximately $36 million for the unit. The deal is expected to close by the end of the first quarter in 2018.

Onward, Upward

40 Act funds come with their own set of challenges. For example, they have to strike a daily net asset value (NAV), whereas most alternatives only need to produce weekly or monthly NAVs. They are also highly regulated and, as such, have their own reporting constraints.

BNP will look to expand its client base among firms with similar global business models to that of Janus Henderson, Dougherty says. Firms that operate across multiple asset classes, and engage in both alternatives and regulated funds across numerous jurisdictions in different types of product structures can benefit from a common, single platform for their global operations, Dougherty believes.

“What we think will differentiate us is our approach to processing—being able to go from post-trade execution all the way through to the fund accounting, fund administration NAV cycle on a fully integrated middle-to-back platform is what will be very interesting for asset managers that are looking for that integrated service model,” he says.

Going forward, the firm is going to “keep an open mind” toward acquisitions on all fronts, he says. But one area of focus for sure will be the private equity space, where, Dougherty says, the custodian has a significant global presence, but is still lacking, from a US operational perspective.