When Challenger became SimCorp’s first Australian client in early 2004, few funds managers and custodians had heard of the Danish software provider. But SimCorp’s decision to come to Australia is finally paying off with Macquarie Bank signing on as its third major client last month. LENG YEOW tracks the Dane’s progress so far.

ABN Amro Asset Management and Macquarie Funds Management Group (FMG) have both completed a review of their backoffice, with ABN Amro sticking with incumbent DSTi and Macquarie FMG signing with Danish software provider SimCorp.  Last month, Macquarie Investment Banking Group (IBG) also signed up for InfoComp’s unit registry system Composer. FMG went live on Composer in May and the group’s new fund accounting solution SimCorp Dimension will interface with Composer and its proprietary unit pricing system.

Macquarie FMG’s decision to run with SimCorp over incumbent DSTi follows an extensive tender process.  Last year the group piloted both Dimension and the latest version of DSTi’s Hi Portfolio for six weeks, choosing to migrate to Dimensions rather than upgrade from Hi Port 2 to the new Hi Port 3.  The transition will be implemented in stages and should be completed by year-end.

ABN Amro also looked at Dimension and Hi Port 3, but will stay on Hi Port 2 “for now”, Roel Willemsen, head of fund accounts and business support at ABN Amro, says.  ABN Amro is also in the process of implementing Iress’ Funds Trading System (FTS), on the back of strong inflows in 2005.  The group’s domestic equities team - led by Andrew King - picked up over $1 billion in new mandates last year.  FTS, the front office system designed specifically for Australian equity managers, will streamline and automate the fund’s modelling process.
It replaces a proprietary system based on Microsoft Excel.  “We’re always looking at what’s available in the market, but there are no plans to change [backoffice systems] this year. Hi Port 2 is doing the job for us so we’ve decided to stay,” Willemsen says.

Macquarie FMG is now SimCorp’s third client in Australia joining Challenger Financial Services and Treasury Group. Elsewhere in the region, SimCorp looks after New Zealand’s second largest retail funds manager ASB Group Investments plus six clients in Asia.  According to Nick Quin, SimCorp’s manager of sales and marketing, the group’s latest win squashes a number of myths about SimCorp in the market.  Firstly, it demonstrates that Dimension can cope with local requirements such as Australia’s capital gains tax (CGT) regime. It also shows that “it isn’t too difficult or too complex” to migrate off an existing system onto Dimension and lastly it affirms the Danish company’s commitment to Australia.  “Macquarie conducts the deepest, most thorough due diligence on all their suppliers. The group put a business case together, which considered factors such as the return on investment in 3-5 years time,” Quin says.  “Macquarie is a big financial services player and this is a big achievement that gives us creditability.”

It will take around 12 months for Macquarie to migrate onto Dimension, a process that will be overseen by Christian Vignes, Macquarie’s operations manager.  The system will interface with the group’s new unit registry technology powered by InfoComp.  Macquarie FMG implemented InfoComp’s Composer and Composer Web last year. The division previously leveraged off the web capabilities of Macquarie Financial Services Group (FSG), whose Macquarie Wrap platform runs on InfoComp’s straight-through-processing engine Conductor. FSG uses Garradin Investment Management Solutions’ fund accounting software.  Rob DeDomincis, managing director and founder of InfoComp, is looking forward to working with SimCorp and FMG this year. The firm’s Composer software has been successfully linked with Garradin and DSTi’s Hi Port, but has yet to interface with Dimension.  DeDomincis is confident the process will be “smooth and straight forward”.  Challenger is also interested in the progress of the transition.

The Packer-backed group first went live on Dimension in July 2004 after a six-month deployment period, and was SimCorp’s sole Australian client for some time.  When Challenger acquired HSBC Asset Management in March 2005, HSBC’s $3.2 billion under management was transferred across to Dimension within five weeks.  According to Derek Goh, Challenger chief information officer, the group has never questioned SimCorp’s long-term commitment to Australia partly because it is in writing.  “As part of our arrangement with SimCorp they had to commit to staying in Australia for a lengthy period of time. That requirement was set down when we first picked them up, but we’ve never been concerned because we trust them and we’ve not been disappointed,” Goh says.

Since entering the Australian market, SimCorp has grown to 20 staff compared to 11 in 2003. An additional 4-5 new appointments are expected shortly including a replacement for former Australian chief Bruce Woods, who left the group suddenly last year.  Simon Dominguez, formerly co-head of sales, also left last year resulting in a restructure of the sales division.  An announcement on a new chief will be made this month, Quin says.  “Talk of us being a European offshoot is not true. We are the Australian office of a global company, that happens to report to a Danish parent,” he says.

(Investment & Technology Magazine, February 2006)