Acquisition Expected to Make State Street Leading Hedge Fund
Administrator Globally
BOSTON & NEW YORK--(BUSINESS WIRE)--
State Street Corporation (NYSE: STT), one of the world’s leading
providers of financial services to institutional investors, announced
today that it has agreed to acquire Goldman Sachs Administration
Services (GSAS), a leading hedge fund administrator, from The Goldman
Sachs Group, Inc. (NYSE: GS) in a cash transaction with a total purchase
price of $550 million, subject to certain adjustments. Pending
regulatory approvals and other customary closing conditions, the
transaction is expected to be finalized early in the fourth quarter of
2012. State Street expects the transaction to be accretive in the first
full year of operation on a cash basis. Through dedicated teams
globally, State Street provides a comprehensive suite of middle office,
fund administration, risk analytics and credit services to hedge funds,
private equity funds, real estate funds and institutional investors.
State Street’s Alternative Investment Solutions (AIS) team has more than
3,000 employees in multiple offices around the world.
A premier global service provider to hedge funds, GSAS administers
approximately $200 billion in single manager hedge fund assets on behalf
of approximately 150 investment manager clients from locations across
the globe. GSAS employees, including client-facing staff and the
management team, are expected to join State Street following the close
of the transaction. The transaction does not include Goldman Sachs’
Prime Brokerage business, which remains an important offering of Goldman
Sachs.
George Sullivan, executive vice president and global head of State
Street’s AIS team said, “GSAS is a premier provider of hedge fund
administrative services and represents a strong franchise supported by
longstanding relationships with highly regarded clients and an
industry-leading service philosophy similar to our own. Servicing
alternative assets remains a strategic focus for State Street. We expect
that GSAS clients will benefit from State Street’s robust and flexible
global servicing platform that is scalable for funds of all types and
sizes. Our continued investment in our global operating platform and
technology solutions makes us well-positioned to meet clients’
increasing needs for regulatory compliance, reporting, transparency and
risk management requirements. We look forward to extending these
comprehensive solutions to GSAS’ clients.”
John Willian, global head of Global Securities Services at Goldman Sachs
said, “We look forward to continuing to serve the hedge fund community,
including many GSAS clients, through Prime Brokerage and elsewhere
across our businesses globally and will work closely with State Street
and our GSAS clients to ensure a seamless transition.”
Cory Thackeray, managing director and global head of GSAS, who will
continue to lead the teams servicing the GSAS clients post-close, said,
“We are pleased to join the State Street AIS team, a group that has the
same high-touch approach to client service as GSAS. With this
transaction, we will be well-positioned to offer our clients an enhanced
product offering that covers the entire investment lifecycle and
provides relevant regulatory compliance, risk and transparency solutions
that our clients often request to help them navigate today’s complex
environment.”
The acquisition will strengthen State Street’s global leadership in
hedge fund administration and will establish the company as the No. 1
hedge fund administrator globally based on industry survey data.1 State
Street today is the No.1 servicer of alternative assets in the world
with $877 billion under administration at June 30, 2012.
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading
providers of financial services to institutional investors including
investment servicing, investment management and investment research and
trading. With $22.4 trillion in assets under custody and administration
and $1.9 trillion* in assets under management at June 30, 2012, State
Street operates in 29 countries and more than 100 geographic markets.
For more information, visit State Street’s web site at www.statestreet.com.
About The Goldman Sachs Group, Inc.
The Goldman Sachs Group, Inc. is a leading global investment banking,
securities and investment management firm that provides a wide range of
financial services to a substantial and diversified client base that
includes corporations, financial institutions, governments and
high-net-worth individuals. Founded in 1869, the firm is headquartered
in New York and maintains offices in all major financial centers around
the world.
1 HFMWeek Assets under Administration Survey, May 31,
2012 which cited $505.5 billion and $200.6 billion of assets serviced
for State Street and Goldman Sachs, respectively.
* This AUM includes the assets of the SPDR Gold Trust (approx. $66
billion as of June 30, 2012), for which State Street Global Markets,
LLC, an affiliate of State Street Global Advisors, serves as the
distribution agent.
State Street Corporation’s Forward-Looking Statements
This news release contains forward-looking statements as defined by
United States securities laws, including statements relating to our
goals and expectations regarding our business, financial and capital
condition, results of operations, investment portfolio performance and
strategies, the financial and market outlook, governmental and
regulatory initiatives and developments, and the business environment.
Forward-looking statements are often, but not always, identified by such
forward-looking terminology as "plan," "expect," "look," "believe,"
"anticipate," "estimate," "seek," "may," "will," "trend," "target,” and
"goal," or similar statements or variations of such terms. These
statements are not guarantees of future performance, are inherently
uncertain, are based on current assumptions that are difficult to
predict and involve a number of risks and uncertainties. Therefore,
actual outcomes and results may differ materially from what is expressed
in those statements, and those statements should not be relied upon as
representing our expectations or beliefs as of any date subsequent to
July 17, 2012.
Important factors that may affect future results and outcomes include,
but are not limited to:
-
the ability to obtain regulatory approvals for the transaction
announced in this news release and the satisfaction of other closing
conditions for that transaction;
-
the risks that acquired businesses and joint ventures will not achieve
their anticipated financial and operational benefits or will not be
integrated successfully, or that the integration will take longer than
anticipated, that expected synergies will not be achieved or
unexpected disynergies will be experienced, that client and deposit
retention goals will not be met, that other regulatory or operational
challenges will be experienced and that disruptions from the
transaction will harm relationships with clients, employees or
regulators;
-
the financial strength and continuing viability of the counterparties
with which we or our clients do business and to which we have
investment, credit or financial exposure including, for example, the
direct and indirect effects on counterparties of the current sovereign
debt risks in Europe and other regions;
-
financial market disruptions or economic recession, whether in the
U.S., Europe or other regions internationally;
-
increases in the volatility of, or declines in the level of, our net
interest revenue, changes in the composition of the assets on our
consolidated statement of condition and the possibility that we may be
required to change the manner in which we fund those assets;
-
the liquidity of the U.S. and international securities markets,
particularly the markets for fixed-income securities and inter-bank
credits, and the liquidity requirements of our clients;
-
the level and volatility of interest rates and the performance and
volatility of securities, credit, currency and other markets in the
U.S. and internationally;
-
the credit quality, credit agency ratings, and fair values of the
securities in our investment securities portfolio, a deterioration or
downgrade of which could lead to other-than-temporary impairment of
the respective securities and the recognition of an impairment loss in
our consolidated statement of income;
-
our ability to attract deposits and other low-cost, short-term
funding, and our ability to deploy deposits in a profitable manner
consistent with our liquidity requirements and risk profile;
-
the manner in which the Federal Reserve and other regulators implement
the Dodd-Frank Act, Basel III, European directives with respect to
banking and financial instruments and other regulatory initiatives in
the U.S. and internationally, including regulatory developments that
result in changes to our operating model or other changes to the
provision of our services;
-
adverse changes in required regulatory capital ratios, whether arising
under the Dodd-Frank Act, Basel II or Basel III, or due to changes in
regulatory positions or regulations in jurisdictions in which we
engage in banking activities;
-
approvals required by the Federal Reserve or other regulators for the
use, allocation or distribution of our capital or other specific
capital actions or programs, including acquisitions, dividends and
equity repurchases, that may restrict or limit our growth plans,
distributions to shareholders, equity purchase programs or other
capital initiatives;
-
changes in law or regulation that may adversely affect our, our
clients’ or our counterparties’ business activities and the products
or services that we sell, including additional or increased taxes or
assessments thereon, capital adequacy requirements and changes that
expose us to risks related to compliance;
-
the maintenance of credit agency ratings for our debt and depository
obligations as well as the level of credibility of credit agency
ratings;
-
delays or difficulties in the execution of our previously announced
business operations and information technology transformation program,
which could lead to changes in our estimates of the charges, expenses
or savings associated with the planned program, resulting in increased
volatility of our earnings;
-
the results of, and costs associated with, government investigations,
litigation, and similar claims, disputes, or proceedings;
-
the possibility that our clients will incur substantial losses in
investment pools where we act as agent, and the possibility of
significant reductions in the valuation of assets;
-
adverse publicity or other reputational harm;
-
dependencies on information technology, complexities and costs of
protecting the security of our systems and difficulties with
protecting our intellectual property rights;
-
our ability to grow revenue, attract and/or retain and compensate
highly skilled people, control expenses and attract the capital
necessary to achieve our business goals and comply with regulatory
requirements;
-
potential changes to the competitive environment, including changes
due to regulatory and technological changes, the effects of
consolidation, and perceptions of State Street as a suitable service
provider or counterparty;
-
potential changes in how clients compensate us for our services, and
the mix of services that clients choose from us;
-
the ability to complete acquisitions, divestitures and joint ventures,
including the ability to obtain regulatory approvals, the ability to
arrange financing as required and the ability to satisfy closing
conditions;
-
our ability to recognize emerging clients’ needs and to develop
products that are responsive to such trends and profitable to the
company; the performance of and demand for the products and services
we offer, including the level and timing of redemptions and
withdrawals from our collateral pools and other collective investment
products; and the potential for new products and services to impose
additional costs on us and expose us to increased operational risk;
-
our ability to measure the fair value of the investment securities on
our consolidated statement of condition;
-
our ability to control operating risks, data security breach risks,
information technology systems risks and outsourcing risks, and our
ability to protect our intellectual property rights, the possibility
of errors in the quantitative models we use to manage our business and
the possibility that our controls will prove insufficient, fail or be
circumvented;
-
changes in accounting standards and practices; and
-
changes in tax legislation and in the interpretation of existing tax
laws by U.S. and non-U.S. tax authorities that affect the amount of
taxes due.
Other important factors that could cause actual results to differ
materially from those indicated by any forward-looking statements are
set forth in our 2011 Annual Report on Form 10-K and our subsequent SEC
filings. We encourage investors to read these filings, particularly the
sections on risk factors, for additional information with respect to any
forward-looking statements and prior to making any investment decision.
The forward-looking statements contained in this news release speak only
as of the date hereof, July 17, 2012, and we do not undertake efforts to
revise those forward-looking statements to reflect events after that
date.
State Street Corporation
Arlene Roberts, +1
617-664-3933
acroberts@statestreet.com
or
Goldman,
Sachs & Co.
Tiffany Galvin, +1 212-357-0019
tiffany.galvin@gs.com
Source: State Street Corporation