State Street and Goldman Sachs are in late stage takes over the sale of the investment banks hedge fund administration unit, according to a report in the Financial Times, citing people familiar with the sale.
The combined business would have funds under administration of close to $700 billion, making it the largest fund administrator in the world.
The development comes amid accelerated consolidation fund administration space, whereby increasing in regulation and growing investor pressure has spurred the outsourcing of functions such as the calculation of risk and NAV to external providers. Administrators have recognized the business opportunities in these developments and sought to scale up in order to meet the needs of new and existing clients. The most recent example of M&A activity in the fund administration space is SS&Cs acquisition of GlobeOp, whereby SS&C shareholders agreed to the 485-pence-per-share (approximately 522 million) acquisition May.
Goldman Sachs, which has AuA of about $200 billion, has been investigating the sale of its hedge fund administration unit for several months and has spoken to a number of potential acquirers, said the FT report.
The report added that in recent weeks, State Street has emerged as the clear front-runner and a deal could be agreed by the end of the month. The company has AuA of just under $500 billion.
Goldman Sachs Fund Administration counts Och-Ziff and York Capital as among its hedge fund clients, which currently stand at more than 500. The division employs about 250 people.
State Street declined to comment.
(JDC)