Montagu Private Equity succeeds another venture capitalist, MML Capital Partners, which had indirectly become a Waystone shareholder in 2019, when it took a stake in one of the founding members of the new group, Irish-based DMS, which also includes Martin Vogel's Luxembourg-based MDO and another Irish outfit, Montlake. MML held 48% of the capital of Waystone, which was officially created last March. "With MML's support, Waystone has been able to position itself as a global governance, compliance and third party management company," explains Waystone's chief growth officer, Cyril Delamare, who founded Montlake in 2009 and is a member of the group's board of directors.
Waystone's business is twofold. As a manco (management company), it helps fund managers set up their structure anywhere in the world. The group is present in Europe for the structuring of Ucits and AIF funds, in the United States for the structuring of US funds --with a presence in the Cayman Islands to serve hedge fund promoters--and now in Asia for the structuring of VCC funds (variable capital companies). As a governance and compliance specialist, Waystone ensures that its clients' products are in line in each country with the requirements of local regulators, that they are well structured and that mandates are well managed in accordance with investment rules, risk scales and prospectuses.
Why the change of shareholder? "We had reached a point where for MML it was the right time to exit," according to Delamare. And for Waystone, it was the right time to move from a "transformational" shareholder--meaning a private equity fund that takes stakes in medium-sized companies to help them grow--to a more institutional fund “that offers us more potential to continue our external growth strategy while giving us enough capital to grow organically.”
The investment, which is currently subject to regulatory approval, will see Montagu Private Equity take a “strategic” stake in the company. Neither the level nor the cost of the stake has been disclosed, but according to Delamare it values Waystone at over $1 billion. Waystone's management team will remain unchanged and all existing managing shareholders will remain in place.
Ambitions all around
External growth has already been discussed for Waystone, which has just acquired four companies specialising in the provision of compliance services--Titan Regulation, Argus Global, CCL Compliance and ISAS based in North America, Singapore, the Middle East, and the UK and Ireland, respectively--to create a new global service line called Waystone Compliance Solutions, which offers a full compliance service to corporate clients. This is in addition to the traditional offering of compliance and compliance services to fund managers at the fund level.
Looking ahead, the group plans to acquire new mancos with the aim of developing its range of products and services and strengthening its presence, particularly in Asia, in order to capitalise on the demand for variable capital company funds recently authorised by the Singaporean regulatory authorities. VCC funds are intended to be the Asian equivalent of Ucits funds.
Waystone is also developing an outsourced trading offer from its Irish, American and Asian offices, available 20 hours a day.
80 employees in Luxembourg
These ambitions will not be achieved at the expense of Waystone's historical businesses of institutional governance, risk and compliance services for the asset management sector and third party management, nor of its historical locations in Dublin and Luxembourg, where it intends to continue to grow. The aim, however, remains to be a global partner for its clients and to accompany them in different geographical areas where they want to expand and be able to offer them local fund formats that are not simply imported Luxembourg or Irish Ucits. "Our clients want a complete regulatory solution across all major markets and domiciles."
Waystone currently has $1 trillion in assets under mandate, of which $100 billion is in Europe, split between Luxembourg (roughly 60%), Dublin (30%) and London (10%). The firm employs 500 people, mainly in Europe. 80 people are currently based in Luxembourg.