Mainstream BPO is due to pay $5.1 million as part of a confidential settlement agreement affecting its US hedge fund administration subsidiary.
The ASX-listed firm said it agreed to pay US$3.95 million to a US District Court-appointed receiver of a legacy client it acquired in September 2016 but did not divulge further details about the matter.
It is "awaiting court approval to pay US$3.95 million to the receiver with no further recourse against any Mainstream entity", the fund administrator said.
"The proposed settlement is on a no admission of liability basis, and if court approval is received, the settlement amount will be paid within five days of receiving court approval. This matter did not involve legal proceedings against the US subsidiary."
In August 2016, Mainstream acquired Fundadministration (now Mainstream Fund Services), a New York-based hedge fund administrator, which at the time serviced 140 funds for 45 clients with funds under administration of US$5 billion.
The settlement will push the firm's net debt by $4 million to $9 million, which was taken into account after releasing its December 2020 half-year results this morning.
The group reported an 18% jump in revenue of $31.5 million compared to the prior corresponding period, but ultimately made a loss of $256,333.
Funds under administration stood at $224 billion, up 20% year on year. The group administers 1202 funds for 362 clients across eight countries.
Asia Pacific, which includes Australia, Singapore and Hong Kong, contributed 74% to total revenue. The Australian custody division's FUA grew 67% to $16.4 billion.
The Americas (US and Cayman Islands) accounted for 20% of revenue, while Europe (Ireland, the Isle of Man and Malta) contributed 6%.
Mainstream invested $5.9 million on new and existing technology that included a process transformation project for client Pendal, which is outsourcing its registry services and other admin workflows, due to go live on February 22.