| Interview: State Street’s George Sullivan, ‘a manufacturer of modern product' |
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| Modern manufacturing could be a way of describing the business process that George Sullivan heads in State Street’s five-centre asset administration business in Ireland, with hubs in Naas - celebrating its tenth anniversary on September 10th - Drogheda, Kilkenny, Carrickmines, in Dublin, and Sir John Rogerson’s Quay in Dublin. Ken O’Brien met him. |
His job title is 'global head of alternative investment solutions' at State Street, where he is responsible for co-ordinating the delivery of services from the 20 locations that make up the world's largest alternative funds administrator - a daily ‘manufacturing’ process that keeps alive and robust a 19% share of a $6 trillion+ business worldwide. | | George Sullivan |
Concurrency, a phrase that applies more to a computer age than a manufacturing age is central to the process, and that's where the analogy ends with manufacturing, as timeliness in the world of daily NAV calculations, and the demands to drive the fastest growing segment of the alternatives industry – liquid alternatives - are at the heart of Sullivan's responsibilities.
In Dublin to launch the tenth anniversary, on September 11th, of State Street's Naas operation where 180 skilled fund administrators work, many of them there since the start, including the head, John Quinn, Sullivan is in a good position to review the experience of State Street over those ten years, a period that included the biggest financial crisis seen in the world since the 1930s.
That financial crisis experience seems close to mind when, describing the world-class attributes of his workforce, Sullivan refers to a kind of resilience and realism shared in his Irish workforce across the five footprint locations that State Street has in Ireland. In his view, the Irish workforce, its skill, work ethic, temperament, and overall competence is ‘second to none’.
“What makes the operation in Naas stand out for me, and indeed all of our locations in Ireland, is the deep pools of expertise we have established here. Some of the most complex and sophisticated requirements of our clients are carried out in Ireland and they need to know that they are dealing with highly expert teams who know them really well and understand the challenges they are facing. We have to be able to deliver 100% of the time - in this business you are only as good as tomorrow's reconciliation”.
His business extends from Hangzhou in China, where State Street now employs 280 staff, to Chennai and Coimbatore in India, Poland, Luxembourg, Channel Islands, (where 300 former Mourant staff are employed), and several in the US, including its Boston operations, where State Street is headquartered.
He says the footprint operation closest to the Irish is a set of administration hubs State Street has in the New York-New Jersey region, including New York city and two sites in New Jersey.
The US business is closest to the Irish footprint, which he describes as ‘the best developed in the State Street global universe’, basically because it is complementary, allows a stability of skill and human capital to build up, with people rooted in their localities with global expertise.
It’s not surprising that this should be so, given that Ireland is the home of 40 per cent of the world's alternatives administration industry, and with State Street accounting for 19 p.c. of that, the experience of Sullivan is telling.
Key elements in the business are, he says, the time zone, as well as accumulated skill levels such as the build-up of expertise, common law expertise, and a stability that has become established in the firm's work culture over the years.
With liquid alternatives growing in attractiveness for investors (e.g. through 40 Act product in the US, and alternative UCITS in Europe and elsewhere), recent figures show that liquid alternatives now have the highest Compound Annual Growth Rates in the world and ever more importance is being placed on rapid reconciliation and accounting of investment assets.
Furthermore, says Sullivan, the future growth of assets in the industry will be in emerging markets, meaning that the intellectual as well as administrative footprint of the global business will need to grow to meet the needs of an increasingly global investment arena.
Hence State Street's growing operations in China, in India, and, he foresees, in South East Asian markets Japan and Korea. He describes the Irish hubs as key elements in this evolution, going back to their original placement when the footprint was rolled out over ten years ago, as having a crucial time zone placement in the daily ‘manufacturing’ process of liquid alternatives. Notwithstanding his recognition of the rising role of middle class wealth in emerging markets, he sees Ireland as a key link in a chain that begins nevertheless where most of the market's customers still exist – in the US, and to a lesser extent Western Europe.
He describes the daily process as moving from close of markets in North America to Asia, and specifically State Street's service hubs in India where reconciliations are done, and moving on, 5 hours later to Ireland, where 5 hours ahead of the opening of markets in the US, the Irish-based administrators are able to pursue and close the 'research breaks' that arise from Indian reconciliations, based on the accumulated knowledge of the Irish based staff. That incorporates both specific client knowledge e.g. of reporting formats, for instance, as well as reporting and other requirements coming out of the investment universe served in State Street administered funds.
He is excited about the accumulated and accumulating expertise of the Irish hubs of State Street, and their potential to grow in an industry with a positive growth prospect. |
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