Two tasks will be front and center for Ultimus Fund Solutions' new chief after the merger with the Gemini Companies closes early next year.

Gary Tenkman Ultimus Fund Solutions President

Yesterday, Chicago-based private equity firm GTCR agreed to separately buy Cincinati-based Ultimus and Hauppauge, New York-based Gemini, then merge them together in an independent mutual fund administration giant. The new company would have more than $150 billion in combined AUA and support more than 840 funds. The deals are expected to close in Q1 2019, and Ultimus president Gary Tenkman will become the combined firm's CEO, under the Ultimus brand. Watch for Tenkman to expand the combined firm and possibly do more deals.

Collin E. Roche GTCR Managing Director

Yet, first off after merger, the combined team will "pull out the corporate infrastructure out of NorthStar ... to be able to operate as [a] separate company," says Tenkman. (NorthStar Financial Group is the soon-to-be former parent of Gemini.)

The other key early task, Tenkman says, is "working together to leverage best practices and technology." He notes that both Gemini and Ultimus currently use the InvestOne for fund accounting and PowerAgent for transfer agency.

"The two core platforms that we use are the same," Tenkman tells MFWire. "That makes the integration a lot easier in that we're just going to focus on best-of-breed surrounds."

"Both businesses have a common technology architecture, agrees Collin Roche, managing director of GTCR. "The opportunity there is somewhat less complex than in other situations."

"Our real goal on this is to keep the client service neutral to positive throughout this process of integration," Tenkman adds.

To that end, Tenkman plans to keep Ultimus' and Gemini's different offices intact. Ultimus currently has offices in: Chicago; Cincinnati; Columbus, Ohio; Denver; and Indianapolis. Gemini has offices in Chicago; Hauppauge; Omaha; Phoenix; and San Rafael, California.

"Our plans are to keep those service offices the way they are. Our collective difference, it's about our service team and providing great service," Tenkman says. "People are going to want to know that their teams will stay intact. There's no plans to consolidate any of that."

As for staff, Gemini and Ultimus have more than 500 employees combined. Tenkman says it's too early to talk about staffing changes. GTCR's Roche says that, while "there will likely be some redundancies," he expects the combined team to be even bigger a year from now.

"We expect these businesses to grow, to grow in staffing and to grow in opportunity set," Roche tells MFWire, adding that Ultimus and Gemini have certain advantages as "non-bank service providers" (in contrast with many other big mutual fund administration shops that are owned by banks). "Both businesses can become that much more competitive in the market with greater scale."

"We'll be working across the aisle to bring the management teams together," Tenkman adds.

Ultimus and Gemini each bring some unique strengths to the table, in addition to their core mutual fund administration efforts. Thanks to Ultimus' acquisition last April of Woodfield Fund Administration, Ultimus is "a little more sizable on the private fund side" of the business." Meanwhile, Gemini does work with ETFs, 529s, and managed accounts.

As for further M&A, the Gemini and Ultimus teams have "enough to chew on right now," Tenkman says, yet doing more deals down the line is on their "radar screen." Roche says GTCR, a 38-year-old PE firm, will be keeping an eye out for more service provider deals.

"We're a growth-oriented firm, and we specialize in working with very strong management teams ... bringing broader product capabilities or broader market coverage or bigger scale," Roche says. 

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