Bisys Group Inc. plans to open offices by the fall in Luxembourg to provide back-office services to mutual fund companies.
The move, which should occur in three or four months, is part of Bisys' plan to expand its presence in Europe. The company has offices in Dublin, London, and the Channel Islands, as well as the Cayman Islands.
"We think there is phenomenal potential" in Europe, said Charles J. Mohr, the president of investment services for the Little Falls, N.J.-based company.
Mr. Mohr pointed out that 60% of all offshore funds are sold through Luxembourg.
Offshore funds are created specifically for non-U.S. residents and registered in tax havens like Luxembourg. In June of last year assets under management in offshore funds totaled $108.9 billion, up from $6.8 billion in 1990, according to Lipper Inc.
Bisys also wants to position itself to serve European banks that manufacture and sell mutual funds, Mr. Mohr said.
As investors become more sophisticated, the banks that handle most of the sales of mutual funds in Europe will be forced to add more U.S.-managed funds to their product menus.
When that happens, they are likely to outsource transfer agent and other fund administration tasks, Mr. Mohr said.
And the move toward privatization of pensions promises to generate more business for mutual fund companies as well as service companies like Bisys, he said.
Bisys is a relative latecomer to the European market, but the company hopes to compete by virtue of its ability to provide hard-to-find services like administration on a multicurrency platform for back-end-load funds, Mr. Mohr said.
Louis Harvey, the president of Dalbar Inc., a Boston-based research firm, said Bisys has "as good a shot as anybody else" in Europe despite its late entry.
"Being first in Europe in the financial services sector wasn't necessarily an advantage," he said. "The opportunities are there for back- office companies in general."
Mr. Mohr said overseas business accounted for 1% of Bisys' fund services business for the fiscal year that ended June 30, 1998, and that figure should rise to 3% for this fiscal year and 12% in fiscal 2000.
The company could eventually derive 10% of revenues, or $50 million to $60 million - from overseas fund servicing, Mr. Mohr said.
Bisys provides overseas fund services such as administration, accounting, and transfer agency to clients including Janus and Rothschild Asset Management.
It is to provide back-office services for Eaton Vance when that company launches a family of funds aimed at European investors this year.