MUFG Acquires HFA Business From UBS

Another investment bank has said goodbye to their hedge fund administration (HFA) unit, as Japanese banking group Mitsubishi UFJ Financial Group (MUFG) will acquire the Alternative Fund Services business from UBS Global Asset Management.

Although terms of the acquisition were not disclosed, it could be one of the largest deals. The Zurich-based unit is the fourth largest fund of hedge fund administrator by assets, with over $536 billion of fund assets under administration (as of March 31 2015), according to the UBS website.

According to a report from the Nikkei Asian Review, a Japanese publication, the acquisition will cost around 30 billion yen, or $244 million.

“This transaction is part of our strategy to build MUFG Investor Services into an industry-leading administrator, both organically and through acquisitions,” says Junichi Okamoto, group head of Integrated Trust Assets Business Group, deputy president, Mitsubishi UFJ Trust and Banking Corporation.

The sale of the HFA unit is the latest example of an investment bank exiting the business, as regulations such as Basel III are forcing banks to review which units are worth keeping.

“We have a sharp focus on executing our strategy, with a clear goal of delivering best-in-class investment management capabilities to our clients. With this in mind, and in light of the increasing drive towards scale in fund administration, we concluded that the future development of AFS in servicing its clients would be best ensured as part of an organization with a strategic focus on asset servicing,” says Ulrich Koerner, president of UBS Global Asset Management.

The transaction is expected to close in the fourth quarter of this year, subject to regulatory approvals and customary closing conditions.

Similarly, Citi is hoping to close the sale of its HFA business soon, according to sources.