Ireland's Custom of Quality

Custom House's turn-key service and commitment to the development of new technology has served to push Europe's fund frontier ever forward. It has become a prime example of Dublin's spirit of financial innovation.

The following article by Dermot S.L. Butler appeared in ifsr (International Fund Services Review) Dublin 2001 Report.

"We provide a complete funds service," says Dermot Butler, chairman of Custom House, stressing the commitment of his firm to the welfare of an increasingly expectant client base. The group is particularly proud of a funds formation service that guides the prospective fundholder through the potentially complex procedure of establishing the most effective fund model possible. The impartial advice provided by Custom House in this process means that once a fund is established it can effectively provide its own highly skilled 'after-care' service in the form of a particularly advanced approach to administration. Butler jokes: "My pension depends on the firm's ability to do this well, so we are very careful to make sure that every element of our service is designed to achieve the best results for the customer." This 'total package' approach has proved very popular to the modern funds client and of course the service works well for Custom House because once it has established a fund the relationship with the customer continues to the administration stage. Given that the concern operates within the lucrative but labyrinthine field of hedge funds, a method of providing a complete overview of the funds journey from start to finish is both attractive and useful.  

Butler guides potential customers to the firm's comprehensive website (www.customhousegroup.com) for an in-depth explanation of their turn-key fund package. The site takes the interested party through the various stages of development and explains the tailored structure of the firm's customer service. The website details the depth and scope of service behind the concept: "The fund will be catered for from day one, with the provision of initial advice on the most appropriate jurisdiction until, in due course when the fund is trading, informing the Financial Times and data services of our share price." Sandwiched between these fund bookends the website clearly lays out the Custom House plan of operation. It will, "establish the fund entity, assist in the preparation of all of the necessary documents and agreements, including preparing the Memorandum of Articles of Association (the corporate charter) and producing the offering documentation." When organising its fund, the firm will work closely with its client's own choice of brokers, custodian banks or trustee, auditor, et al. But as the website makes clear, "if a client does not have a preference for a particular service provider, Custom House can introduce suitable candidates for the client's consideration." This illustrates the lengths the group will go to ascertain that the customer is investing in the most appropriate package and receiving the best level of service.

Custom House's adoption of the communication skills of the Internet reflects the concern's belief in the possibilities of utilising the latest technology. Simply as a marketing tool, the comprehensive information that exists on the site will increase the profile of the group, but its commitment to technical excellence continues once the customer has clicked off the site and made the decision to become a Custom House client. The website represents the foothills of the technological mountain while planting the Custom House flag on the summit is the concept of PFS-PAXUS. The package was designed specifically for the alternative investment and hedge fund market and is intended to smooth the hedge fund experience and provide a more rapid and accessible centre of information. The company says: "Hedge fund investors and managers will be able to get more accurate, timely and easily updated net asset value (NAV) figures, fund statements and fee calculations thanks of a new, fully integrated administration system." The system represents a new dawn for the hedge fund and will be responsible for an increased European take-up rate, plus its association with a Dublin-based concern can only have a positive impact on the jurisdiction.

Butler is clearly excited by the possibilities it offers: "PFS-PAXUS provides faster, more reliable fund calculations and number crunching capabilities that the global hedge fund industry demands. Custom House has been closely involved with PFS in the design, development and real-time testing of PFS-PAXUS for almost two years and we are now transferring our entire client list onto the system." He realises that the system will alleviate some on the inherent difficulties associated with administering European hedge funds and points out that PAXUS will be able to deal with the equitable allocation of incentive fees. Equalisation is a particularly complex method of fee payment that confuses both investor and manager and does not occur in the US market because of the existence of partnership accounting. The 'Series of Shares and Consolidation' method utilised by PAXUS provides a fair apportioning of fees based on the performance of a fund. Butler describes it as being "an equitable system for both managers and investors that allows each shareholder to pay the correct level of incentive fee."

Industry advancement seems to follow industry advancement in Dublin's IFSC and Butler is ebullient about the advantages of operating in the jurisdiction, clearly expecting further progress in the future. He says: "Although all of our funds are domiciled outside of Dublin, it is an excellent place to work, especially in relation to the US and European markets." Custom House's administrative duties mean that it acts as the interface between the fund manager and the client and, because the majority of offshore funds are directed at European and Middle East investors, a Dublin berth makes perfect time-zone sense for this market. Naturally a Europe or Middle East-based client would prefer an administrator to be based in their approximate time zone because, as Butler points out, "this is much more valuable than having one sat in a skyscraper in New York, Chicago or Boston." Butler also explains the advantages for a US fund manager. "Managers on the East coast and West coast of America can also gain easy access to Dublin's administrative environment, queries can be delivered by e-mail and answers can be returned the following day before the US has even woken up, creating a highly efficient line of communication."

Dublin appears to be the perfect operational zone and Custom House's existing expertise and investment in the latest technology mean that it can afford to be sanguine about the general industry concern surrounding a shortage of staff. Butler even doubts the 'Irishness' of this condition saying, "A shortage of staff is not purely an Irish concern, as there is a shortfall of staff all over the world and it is certainly easier to get qualified staff in Ireland than it is in the Caribbean." Custom House believes that Ireland has the available skill levels to cope with the future direction of the industry, a future direction that includes the further development of the hedge fund sector. Hedge funds are now being established in the jurisdiction because of the relaxation in regulation performed by the Irish Financial Services Regulatory Authority. Butler is largely supportive of these moves, but reminds investors that Dublin's reputation is built on solid regulation and has thrived as an administrative centre, because fund managers trust their jurisdiction to administrate their vehicle with a watchful integrity that some believe may be lacking in other regions. Butler welcomes fund managers but spells out that Custom House will continue to concentrate on its own area of expertise so that its client base can receive a continuing service of quality.

Dermot S.L. Butler is Chairman of Dublin-based Custom House Administration & Corporate Services Limited ("Custom House"), a company that specialises in assisting clients in the organisation, establishment and administration of alternative investment and hedge funds. Custom House is authorised by the Irish Financial Services Regulatory Authority ("IFSRA"), (formerly the Central Bank of Ireland), under the Investment Intermediaries Act, 1995.

Custom House Administration & Corporate Services Ltd.
Address: 25 Eden Quay, Dublin 1, Ireland.
Tel: +353 (0)1 878 0807 / Fax: +353 (0)1 878 0827
E-mail: Dermot S. L. Butler (Chairman) dermot.butler@customhousegroup.com
        or David P.M. Blair (Managing Director) david.blair@customhousegroup.com