Luxembourg-based One Group Solutions (One) has secured a capital injection from a US investment firm that the fund services provider said will help fuel its expansion plans and maintain its independence, bucking the industry trend towards consolidation and control by private equity firms.

New Private Equity (NPE), a technology-focused PE outfit in Miami, will make a “strategic investment” in One, the company said on Wednesday.

One Group Solutions declined to disclose the financial terms of the deal, such as the amount NPE is investing in the company. On its website, NPE says that it makes “equity investments between $50 million and $300 million” (€42.5 million to €255 million). The company stated that it expects the deal to receive regulatory approval in the fourth quarter of this year.

NPE is taking a minority stake, Steve Bernat, co-founder and group executive at One Group Solutions, told the Luxembourg Times. “We’ll remain founder-led and totally independent.”

The company’s co-founders and staff “continue to own the majority of the firm,” Bernat said in an interview. “Nothing is changing. One remains One. The team remains in place and it’s only going to accelerate our growth.”

We want to continue to be independent

Steve Bernat

Co-founder and group executive, One Group Solutions

The bid to remain independent goes against the current grain in the fund services sector. Competitors such as Apex and Waystone have bulked up through a series of acquisitions, while Alter Domus, IQ-EQ and Trustmoore are majority controlled by private equity firms, giving them amble capital to scale.

“We want to continue to be independent because that’s become one of our key USPs [unique selling points] in the industry,” Bernat said.

He brushed off a question about the company being able to compete against consolidated rivals by pointing out the firm was founded six months before the Covid-19 pandemic and “everything we have done for the past six and a half years was organic growth.”

Today “we’ve got 200 blue chip client names worldwide, clients in every continent, in every asset class,” Bernat said. “So we’re not necessarily concerned by the size [of rivals]. We also don’t want to be bought by any of our competitors. Hence, the strategic decision to let an investor come in, to be able to keep pace [with bigger players].”

“We’ve invested millions, and we’ll continue to invest millions in our technology, and that includes, of course, AI. But the benefit we had is, we’ve not had to revamp [legacy systems],” he said, arguing that the company does not have to spend as much on IT as competitors.

Global growth

The international success of Luxembourg-founded companies “is not being talked about enough” in Bernat’s view. He pointed out that his organisation and several competitors were started up in the Grand Duchy “and people sometimes tend to forget about this.”

“As a Luxembourger, that frustrates me because we should be proud of the environment that we have in Luxembourg to actually start with nothing and grow this into a very successful business that just after a few years actually has a global reach, a global client base, a global footprint, with that kind of growth attached to it. You won’t see that in every country. So let’s not forget [about] the environment that we have in Luxembourg to actually make that happen.”

One provides a range of fund administration, compliance, management company and reporting services. It posted core profits of €4.9 million on €23.4 million in total turnover last year.

The company was founded in Luxembourg in 2019 has grown from 10 to 160 people today, with about 90 staff members based in the Grand Duchy, Bernat said. “We closed end of last year with 100 people. We’re going to be 200 by the end of this year. So that’s doubling within a year, and we’ll certainly continue a growth of roughly 30% for at least the next three years,” under the company’s growth plan.

While One does not plan to become an industry giant, it is selectively eyeing potential acquisitions and geographic expansion. “Where we feel there is a need from a client perspective or a market perspective, then we are definitely planning to do acquisitions,” Bernat said. “But those will be very limited and very tactical and strategic rather than just buying market share.”

One currently operates in eight jurisdictions. Bernat said it historically has decided to open new locations “driven by client demand and that’s how we will continue to behave.”

“There’s a few ‘blank spots’ if I’m looking at our map” of office locations, he said. “Just to name a few obvious ones, the Cayman Islands, Channel Islands, or even to an extent Switzerland, are definitely on our radar where we’d like to expand into in the very foreseeable future.”

Pressed on the definition of the “foreseeable future”, Bernat said to expect an announcement “in the next five months.”