State Street confirmed today that it has agreed to acquire International Fund Services (IFS), the hedge fund accounting and administration business headed by CEO Jim Kelly. The announcement, long expected, follows the example set by BISYS in buying Hemisphere and confirms both that mainstream fund administrators need hedge fund capabilities for their fund management clients and that offshore administrators are under pressure.
“This is a tremendous opportunity for all involved, including the sophisticated clients and deep bench of talented professionals both companies enjoy,” explains Kelly. “The combination will create a winning team that we are confident will set new standards in servicing in this rapidly growing sector. Our services are highly complementary with State Street’s core capabilities and we expect a swift and successful integration of our businesses.”
New York-headquartered IFS services over 100 large asset management firms and private equity fund managers, representing more than 350 funds globally from operations centers in New York and Dublin. The company employs approximately 500 people.
“This acquisition marks an important milestone in delivering on two of our key priorities — enriching our relationships with sophisticated global investors and extending our capabilities in alternative investments, including hedge funds,” explains David A. Spina, chairman and chief executive officer of State Street. “In addition to expanding our core servicing capabilities, we will build our presence in alternative investments by leveraging our strengths in securities finance, and by taking ownership interests in proven service providers specializing in alternative investment products. The transaction contributes to our focused strategy to meet the needs of our institutional clients as they increasingly allocate a larger share of their funds under management to non-traditional investments. Incorporating IFS’s capabilities illustrates another way we are continuing to provide outstanding client service, the cornerstone of State Street’s success.”
Financial terms of the transaction were not disclosed. The deal, which is subject to regulatory approval, is expected to close in the third quarter and to be neutral to earnings in 2002.