Link enters UK pensions market, grows fund solutions

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Link Group has forged a strategic global partnership and taken a minority shareholding in UK workplace pension provider Smart Pension. The deal has potential benefits for Link’s ambitions in pensions administration elsewhere in the world, including Australia and New Zealand.

Link is also expected to announce this week an expansion of its fund solutions division in Australia, with the recruitment of well-regarded Peter Sipek, a former AMP Capital head of investment operations.

Link Group previously bought a boutique funds management administrator, White Outsourcing, in late 2016, which started Link down the path of funds management administration. Then, in May 2018, Link recruited Paul Khoury, State Street’s former head of operations in Australia, and a former head of global services and a regional managing director for the big custodian, as chief executive of fund solutions for Australia.

Re-branded as Link Fund Solutions (LFS), the business is a specialist provider of outsourced middle and back-office administration, fund accounting services and custodial services to managers, trustee companies and listed investment vehicles.

Sipek was the director of investment services at AMP, where he worked from 2006 until 2014. He was also an executive director of AMP Capital. More recently he held a contract role with NSW’s State Super (formerly STC), to assist in the three-way merger of its back-office functions between STC, NSW Workcover (now called ‘icare’) and the old TCorp.

Link Group also acquired a similar, but much bigger, company in the UK in 2017, for about A$1.5 billion. That was Capita Asset Services which is looking to leverage the intellectual property and technology used in both to expand globally. This meant that LFS became a global business, with most of its revenue from the UK and Europe.

The new partnership announced last week, with Smart Pension, the UK fintech launched in 2015, provides Link with an immediate entry into the UK retirement market – the third-largest in the world with an estimated US$2.9 trillion in assets. Link joins Legal & General and J.P. Morgan as equity investors in Smart Pension.

Link Group will have exclusive use of the Smart Pension platform in certain jurisdictions across Europe and Asia. Link will also take on the administration for Smart Pension’s UK workplace pension operation, including the administration of its Smart Pension Master Trust, subject to there being no objections from the regulator.

In a statement last week, Link said: “This partnership with Smart establishes a Link Group pension and retirement solutions offering in the UK. Link Group’s new UK initiative will be led by Susan Ring. Susan will continue in her role as chief executive, Corporate Markets, EMEA. Smart Pension currently has about 500,000 members and 60,000 employers.”

Auto enrolment in the UK, which is similar to the superannuation guarantee legislation in Australia, has required all UK employers to automatically enrol their eligible workers into a pension scheme – replacing the previous ‘opt in’ regime with an ‘opt out’ system.

John McMurtrie, Link Group managing director, said last week: “We are impressed by the Smart Pension team and confident in their people and technology capabilities, as well as their extensive understanding of the defined contribution pensions market in the UK. This partnership will leverage Link Group’s core capabilities and is an example of our strategy to identify attractive adjacent market opportunities aligned with our service strengths, with a pathway to future growth.”

The Smart Pension deal was announced just two days before Link’s annual general meeting on November 15. McMurtrie said at the meeting that the company was considering the further organic “and inorganic” expansion of LFS in Europe and Asia, as well as the expansion of the group’s Banking and Credit Management (BCM) business, which is part of Link Asset Services.

“We invest heavily to maintain our position in the market, and over the years have been first to market with a range of investor tools that have received market recognition. For example, our Investor Centre mobile app that provides retail investors with real-time portfolio access to all of their shareholdings, administered by Link Group. We are pleased to advise that this app was voted ‘Financial Services App of the Year’ in Financial Standard’s MAX Awards this year – the third year running that Link has won this award,” he said.

“This is just one example of how our clients and their own customers benefit from our investment in technology and innovation. We invest over 5 per cent of revenues on capex, a large component of which is technology related – investing across new product innovations, data analytics, data security, process automation, web and connectivity tools.”

– G.B.

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