South America. Buy or Build?

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Peter Hughes, Owner of Apex Group, says, “We are in Chile this week at a family office conference. It’s not easy sitting through multiple presentations about investing globally especially when they are in Spanish and we don’t speak Spanish particularly fluently.

We are looking to open an Apex fund administration office in South America and have to consider which country is best and whether we should JV or build a business from scratch.

It is clear that an office should be run by someone local to the country it is in. The choices come down to Sao Paulo, Montevideo, Santiago or Miami. There are different costs involved and increased due diligence needed in some locations. The regulators are understanding the need for independent service providers but it is always expensive to be the first in some countries.

The timing seems to be good to provide a global fund administration service offering to smaller and medium managers from South America. To JV with another provider or asset manager is a short-cut to profitability and makes sense if the proportions work.

With either buying or building a fund administration business the key to the success will be finding the right person to run the business. It is this factor that will probably determine the initial location as you can only deliver the highest levels of client service with the right person setting the pace and example.”

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