Calculus Capital makes GBP2m private equity investment in digital administration firm
Private equity fund manager Calculus Capital has invested GBP2m - via its EIS Fund - into a digital administration services provider of low-cost solutions for the pensions, savings and investment industries.
Through its proprietary technology platform, Quai provides white-label administration services for personal savings products at a fraction of the costs currently borne by traditional providers.
Quai was established in 2011 by a team of former Legal and General, Brewin Dolphin and BNP Paribas Securities Services executives. The founders recognised that legislative and regulatory changes such as auto-enrolment, the Retail Distribution Review and the Solvency II Directive would fundamentally change the way wealth managers, insurers, banks and other pension and investment companies provide savings products to individuals.
Mass distribution of individual savings plans, combined with the elimination of commission payments are forcing providers to offer high-volume, low-margin saving plans - a process that is being further accelerated by the proposed government cap on pension scheme costs.
However, the legacy systems of providers are increasingly unfit for the demands of this rapidly evolving landscape, driving a need for more advanced technology to reduce administrative costs, increase capacity and improve efficiency.
Susan McDonald, chairman of Calculus Capital, says: “Providers are having to manage more pension schemes, savings and investment products at a lower unit cost, whilst struggling with inefficient legacy systems and processes. Established operators must choose whether to build bespoke in-house systems to administer mass-market products – which is likely to be extremely expensive and time-consuming – or to outsource to a service supplier with a fully developed platform. Quai’s platform is regarded as one of the most advanced and cost-effective third-party solutions and is therefore generating a great deal of interest from major financial institutions.”
Quai’s outsourced service is built on a proprietary technology platform incorporating a full service portfolio management system. It allows banks, insurance, pension and investment businesses to efficiently administer extremely high volumes of savings plans through automated systems, straight-through processing, online functionality and multi-currency individual and model portfolio management services.
Ms McDonald adds: “Our investment should provide Quai with the breakthrough capital it needs to convert current levels of interest in its platform into signed contracts. The funding will support Quai in the completion of several deals with key UK financial institution that are keen to benefit from the company’s services as soon as possible.”
Tony Webb, Quai managing director, adds: “Calculus’s investment comes at a crucial stage in our growth and development. There is a huge need for our services and technology platform; investment and pension administration systems are effectively creaking under the increased demands placed on them by the need to roll out mass-market products. Unless they take action this strain on their back-office systems is likely to result in potentially costly and damaging problems occurring. With our focus on high efficiency systems, we are able to resolve these problems and reduce costs to our clients and their end customers.”
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