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Rating:An Asset Manager Sells Its Fund Services Arm Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, June 27, 2016

An Asset Manager Sells Its Fund Services Arm

Reported by Neil Anderson, Managing Editor

A Midwestern, publicly-traded asset manager is selling its third-party fund services mutual fund support unit to an independent shop in New England.

On Thursday Richard Berthy and David Whitaker (CEO and president, respectively, of Portland, Maine-based Foreside Financial Group) unveiled a deal to buy Columbus, Ohio-based Beacon Hill Fund Services from Diamond Hill Investment Group [profile]. The deal is expected to close on July 31, and terms were not disclosed.

MFWire could not immediately reach Diamond Hill CEO Chris Bingaman or a Diamond Hill spokesperson for comment on the deal.

Beacon Hill's team of 22 supports 19 clients, 144 funds, and $28.6 billion in combined assets. Steve Mintos, president of Beacon Hill, confirms that his entire team will be joining Foreside.

"Everybody's going," Mintos tells MFWire. "The whole team is part of the deal."

Foreside's B-Ds serve as the distributor for more than $800 billion in combined assets, and it has offices in Berwyn, Pennsylvania and Boston, Massachusetts, as well as Columbus and Portland. Once the deal closes, Foreside will have about 150 people in total. Foreside first launched in 2005.

Both Beacon Hill and Foreside offer the following services to mutual funds: distributor (Foreside will have 18 broker-dealers once the deal closes), compliance (including providing funds with a chief compliance officer), finance (including providing funds with a chief financial officer), business management, and corporate governance. (Beacon Hill and Foreside do not handle fund accounting, custody, or transfer agency.)

Berthy praises the Beacon Hill team as "some of the industry's most experienced professionals."

"Foreside and Beacon Hill share a strategic vision to broaden our scope of products and services, and to enhance our core services for investment managers and their funds, in both the U.S. and offshore markets," Berthy states.

"We've known them for years," Whittaker tells MFWire. "We share a strategic vision and culture and provide many of the same products and services."

"They're a great firm, the leader in the marketplace. What's not to like about that?" Mintos says of Foreside. "Some of our folks and some of their folks have worked together with joint clients in the past, in previous lives. There was a ton of synergy."

"We were at a stage in our life where we needed to be serious about what what we were doing next," Mintos adds, saying that it's very important to the Beacon Hill team "to be independent and objective."

"We're going to a company that's in the same space that we are, that's independent," Mintos adds.

Diamond Hill created Beacon Hill about eight years ago, first to support Diamond Hill's own funds.

"They'll continue to be a client," Mintos says of Diamond Hill, "They see the need for us to go to the next step."

The Beacon Hill team and Foreside's Columbus team, about 30 people in total will combine in a new office space in Columbus suburb Gahanna, in the same building as Foreside's current Columbus office. And that new office space, Mintos says, will provide space for Foreside to expand out to 45 or more people in the Columbus area.

Once the deal closes, Mintos confirms that the Beacon Hill Fund Services brand "will go away." And, the Beacon Hill team will be integrated into the rest of Foreside.

Check back for more updates as this story develops. 

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