Hg-backed Gen II Fund Services explores $6B sale in major fund administration deal

Gen II Fund Services, the private capital fund administrator backed by software investor Hg and private equity firm General Atlantic, is exploring a sale that could value the company at up to $6 billion, according to the Financial Times.

What Gen II actually does

Founded in 2009, the New York-based firm provides tech-enabled fund administration services to private capital asset managers, handling the accounting, reporting, and compliance work so fund managers can focus on deploying capital.

The firm currently oversees more than $1.5 trillion in assets under administration.

Gen II has built its scale through a combination of organic growth and strategic acquisitions. In March 2022, it purchased Update Capital to bolster its capabilities in real estate fund administration.

The ownership picture

General Atlantic, Hg, and IHS Markit (now part of S&P Global) led an investment round in November 2020, alongside Belgian family-owned investment firm Cobepa. HgCapital Trust invested approximately 20 million pounds as part of that deal.

Now, that ownership group is reportedly considering an exit later this year. No formal sale process has been launched, and no advisers have been appointed yet.

Why fund administration is suddenly a hot commodity

Private capital has been on a relentless growth trajectory for years, with more money flowing into private equity, venture capital, real estate, and credit strategies than ever before. As the private markets industry has expanded, so has the complexity of administering these funds, with regulatory requirements tightening and investors demanding more transparency. Fund managers, rather than building out expensive in-house teams, have increasingly outsourced these functions to specialists like Gen II.

What this means for investors

A $6 billion exit would represent a significant return for Gen II’s backers. The growth in assets under administration to over $1.5 trillion, combined with the Update Capital acquisition and organic expansion, has moved the needle on valuation.

The absence of a formal process or appointed advisers means there is still considerable uncertainty about whether this sale will actually happen, what form it will take, and when.

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