Baring Asia agrees its largest-ever buyout

The seller is Europe-based PE firm IK Investment Partners. The size of the transaction was not disclosed, although it was reported last year that IK was looking to take the business public in Hong Kong at a valuation of around $900 million. 

Vistra Group is headquartered in Hong Kong and has a strong presence in Asia. However, the industry remains highly fragmented in the region and Baring plans to support consolidation efforts, according to a source familiar with the deal.

IK acquired the Offshore Incorporations group of companies - best known in Asia for helping investors set up corporate structures in jurisdictions such as the British Virgin Islands - from The Carlyle Group in 2011. The business was combined with existing portfolio company Vistra Group, a fund administration, trust and corporate services provider in Europe.

Merging company formation specialist OIL, corporate services provider Acceptor and investment trust specialist Credence Trust - which had bases in Hong Kong, Singapore, Taiwan, Shanghai, Beijing and Shenzhen - with Vistra created a diversified corporate services provider. It now has over 1,300 employees in 46 offices across 35 jurisdictions.

IK claims to have quadrupled the size of the business during its ownership period and Vistra Group claims to be one of the top four corporate trust services providers globally and the number one in Asia. According to the IK website, the company generates annual sales of EUR244.4 million ($273 million).

Corporate service providers, which typically have high client renewal rates and generate strong cash flows, have proved popular with private equity, particularly as the industry moves towards consolidation.

In 2010, Doughty Hanson bought Equity Trust from Candover Investments for EUR350 million and merged it with a TMF, which had acquired two years earlier. Renamed TMF Group, the company boosted its Asia presence with the purchase of KCS from UCL Asia Partners last year. In 2012, The Blackstone Group acquired Intertrust for a reported EUR675 million and then bolted on ATC Group the following year. The company is said to be eyeing an IPO.

Vistra Group has also completed a number of acquisitions, picking up NovaSage and TAKA in Hong Kong as well as several other assets in Europe.

"With Baring Asia's support we will be able to further enhance our leading position in a consolidating industry. We are delighted that Baring Asia has demonstrated a strong commitment to the growth of Vistra's business as well as to our exceptional people who have been instrumental to our success," Martin Crawford, CEO of Vistra Group, said in a statement.

In recent years regulation of corporate service providers has intensified - in part as a result of international efforts to clamp down on the perceived misuse of offshore jurisdictions - and compliance has added to the administrative burden. An overwhelming majority of respondents in a survey conducted last year by Vistra Group's OIL division said they expected costs to rise. Corporate service providers predicted an average cost increase of 22.2%.

OIL suggested that the evolution of the global accounting industry, which survived as a Big Eight for much of the 20th century before a spate of mergers from the 1980s onwards led to the current Big Four, provides a possible template for corporate service providers.

The transaction is still subject to regulatory approval. Once completed, Vistra Group management will continue to hold a significant stake in the business.

Baring Asia manages funds with more than $9 billion in committed capital. It closed its sixth pan-regional vehicle earlier this year at $3.98 billion.

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• Topics
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• Greater China
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• Baring Private Equity Asia
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• Asia