More Consolidation on the Buy Side as Broadridge Nabs Bonaire

Since I first started at Waters four years ago, there has been a good deal of consolidation on the buy side, especially with sell-side focused firms expanding their buy-side presence through acquisition.

One has to look no further than Broadridge for evidence of this shift. On Wednesday it was announced that Broadridge had acquired Bonaire, a significant buy-side vendor especially with its fee billing calculation capabilities.

Michael Liberatore, chief operating officer of the mutual funds solutions group at Broadridge, told me that this was an important move for the company because, "we have a very complimentary market and client linkages, and we have products that are very much in line to build off each other to support our clients' needs."

As with any acquisition, end users are going to have to wonder how this is going to affect their services going forward. I think that it's fair enough to say that hedge funds and asset managers who already use Bonaire's flagship product, Revport, or those who are thinking about making a switch, can go ask Paladyne users how their experience has been since Broadridge snapped up the buy-side vendor in September 2011.

Paladyne has kept its name and branding in the aftermath of the acquisition. The only change has been that Paladyne's official name now features that add-on: "a Broadridge Company". 

It should be noted, though, that two of the founders of Paladyne─Sameer Shalaby and Scott Alderson─left the firm in the past two weeks, according to sources, and the company's CTO, Sol Zlotchenko, left in December. Sources indicate that this wasn't because the firm's quality had fallen off, but that it had more to do with a change of direction after revenue mandates were missed.

Chris John is staying on at Bonaire and he told me that he was very excited about the new opportunities that teaming with Broadridge will provide. Whether or not Bonaire will keep its name similar to Paladyne─or, conversely, be rolled into Broadridge's suite of solutions and solely rely on the Broadridge moniker─is still up in the air, as the deal isn't expected to close until next month.

According to Diana Awed, vice president of mutual funds & retirement marketing at Broadridge, "We're focused right now on how we fit together in the market...and how best to extend our value to our clients. In terms of branding it's a little too early to say."

It will also be interesting to see if Broadridge pairs Bonaire, specifically with its fee billing and expense calculations platform Revport, alongside Paladyne, which similarly has a strong buy-side focus with solutions for the front, middle and back offices.

"We think that there will be a nice fit with Paladyne," Awed says, though the two teams haven't had a chance to sit down and chat with one another. She also notes that each firm brings something unique to the market without much overlap.

We'll also have to wait and see if Broadridge will look to use Bonaire on the sell side. Starting last year, Bonaire started to make a move in that direction after signing UBS.

John says that the Bonaire suite of solutions is "universally adaptable" and that "the use of our computational engine is relatively consistent," for both the buy side and sell side. "We do not view it as this or that; I think it is complimentary," he says.

Think that this is a good pairing for the buy side? Are you worried that the Bonaire solutions will get watered down? Is Broadridge growing too fast through acquisition, or is this a much-needed value-add? Let me know. Shoot me an email (anthony.malakian@incisivemedia.com) or give me a call (646-490-3973).

[Note: An earlier version of this story stated that Shalaby was still with Paladyne.]