STATE STREET TO EXPAND ALTERNATIVE INVESTMENT SERVICING CAPABILITIES


Date: Tuesday, December 1, 2009
Author: State Street Press Release

AGREES TO ACQUIRE LEADING EUROPEAN ADMINISTRATOR

 

Acquisition Expected to Make State Street Largest Alternative Asset Servicing Provider Globally With $600 Billion in Assets Under Administration

   Boston and London 1 December, 2009 – State Street Corporation (NYSE: STT), one of the world’s leading providers of financial services to institutional investors, announced today that it is expanding its global fund administration and alternative servicing capabilities with an agreement to acquire Mourant International Finance Administration (MIFA) in a cash transaction. Pending regulatory approvals and other closing conditions, the transaction is expected to close in the first quarter of 2010.

State Street expects the transaction to be slightly accretive to 2010 earnings, excluding one-time costs.

Headquartered in Jersey in the Channel Islands with approximately $170 billion in assets under administration and approximately 650 employees in locations including Dublin, Singapore and New York,  MIFA is a leading provider of fund administration services, particularly for alternative investments, such as private equity, real estate and hedge funds.

The acquisition will strengthen State Street’s leadership in global alternative asset servicing.  The combined State Street and MIFA businesses will rank No. 1 in alternative asset servicing globally; No. 1 in private equity servicing globally; No. 1 in real estate asset servicing globally and No. 2 in hedge fund servicing globally, based on industry survey data1.  With the acquisition, State Street will also expand its reach in Europe and Asia and broaden its capabilities for servicing investors’ growing real estate administration requirements.

“As alternative asset classes have become more mainstream, our institutional customers plan to continue to expand their use of this asset class,” said Jay Hooley, president and chief operating officer of State Street.  “This acquisition will bring a wider and more comprehensive product offering to our existing and new customers and further develop our servicing footprint in Europe and Asia where expanded capabilities, including enhanced real estate servicing, better enables us to offer customers a full breadth of solutions for all of their business needs.”

“Today’s announcement will allow MIFA to advance its position in the alternative administration segment of the global fund administration business, broaden its service capabilities and expand to even more markets than before through State Street’s global footprint,” added Nicola Palios, chief executive officer of Mourant Limited. 

State Street has significantly grown its capabilities in the alternative asset servicing segment of the global fund administration market over the last seven years.  In 2002, the company acquired International Fund Services (IFS), a leading provider of hedge fund administration services and in 2007 State Street significantly expanded its leadership in this market with its acquisitions of both Investors Financial Services Corp. (IBT) and Palmeri Fund Administrators (PFA).

 “MIFA’s team of professionals will augment our existing alternative and private equity operations,” added Jack Klinck, executive vice president and global head of State Street’s Alternative Investment Solutions team. “As a result, State Street is well-positioned to continue to grow its position in the increasingly important alternative asset segment.”

With more than $420 billion in alternative assets under administration as of September 30, 2009, State Street’s Alternative Investment Solutions (AIS) team provides a complete set of fund accounting, fund administration, risk and credit services to hedge fund managers and private equity managers and institutional investors. State Street AIS has more than 2,400 employees with locations in Boston, Ireland (Drogheda, Dublin, Naas), Toronto, London, Tokyo and Sydney, New York and New Jersey. MIFA has locations in the Channel Islands (Jersey, Guernsey), London, Dublin, Luxembourg, Singapore, Hong Kong and New York.

 

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 $17.9 trillion in assets under custody and administration and $1.7 trillion in assets under management at September 30, 2009, State Street operates in 27 countries and more than 100 geographic markets worldwide. For more information, visit State Street’s web site at www.statestreet.com.

 

  1 No. 1 in alternative fund servicing: Aggregating State Street and MIFA data from HFM Week 12th Biannual Assets Under Administration Survey, April 2009; ICFA Alternative Fund Administration Survey April/May 2009; No. 1 in private equity and real estate servicing: Aggregating State Street and MIFA data from ICFA Alternative Fund Administration Survey April/May 2009; No. 1 in real estate servicing: Aggregating State Street and MIFA data from ICFA Alternative Fund Administration Survey April/May 2009; No. 2 in hedge fund servicing: Aggregating State Street and MIFA data from HFM Week 12th Biannual Assets Under Administration Survey, April 2009.

 

Forward-Looking Statements

This news announcement contains forward-looking statements as defined by United States securities laws, including statements about our agreement to acquire MIFA, the results and impact of that acquisition and related rationales, as well as about our goals and expectations regarding our business, financial condition, results of operations and strategies, the financial and market outlook, governmental and regulatory initiatives and developments, and the business environment. 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 the date of this release.

 

Important factors that may affect future results and outcomes include, but are not limited to:

·  the ability to obtain regulatory approvals for the transaction in multiple jurisdictions and the satisfaction of other closing conditions;

·  the risks that businesses will not be integrated successfully, or will take longer than anticipated, that expected synergies will not be achieved or unexpected dissynergies will be experienced, that customer retention goals will not be met, and that disruptions from the transaction will harm relationships with customers, employees and regulators;

·  financial market disruptions and the economic recession, whether in the U.S. or internationally, and monetary and other governmental actions designed to address such disruptions and recession, including actions taken in the U.S. and internationally to address the financial and economic disruptions that began in 2007;

·  increases in the potential volatility of, or declines in the levels of, our net interest revenue, changes in the composition of the assets on our consolidated balance sheet and the possibility that we may be required to change the manner in which we fund those assets;

·  the financial strength and continuing viability of the counterparties with which we or our customers do business and to which we have investment, credit or financial exposure;

·  the liquidity of the U.S. and international securities markets, particularly the markets for fixed-income securities, and the liquidity requirements of our customers;

·  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 income statement recognition of an impairment loss;

·  the maintenance of credit agency ratings for our debt and depository obligations as well as the level of credibility of credit agency ratings;

·  the possibility of our customers incurring substantial losses in investment pools where we act as agent, and the possibility of further general reductions in the valuation of assets;

·  our ability to attract deposits and other low-cost, short-term funding;

·  potential changes to the competitive environment, including changes due to the effects of consolidation, extensive and changing government regulation and perceptions of State Street as a suitable service provider or counterparty;

·  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;

·  our ability to measure the fair value of the investment securities on our consolidated balance sheet;

·  the results of litigation, government investigations and similar disputes and, in particular, the effect of current or potential proceedings concerning State Street Global Advisors’, or SSgA’s, active fixed-income strategies and other investment products;

·  the enactment of legislation and changes in regulation and enforcement that impact us and our customers;

·  adverse publicity or other reputational harm;

·  our ability to pursue acquisitions, strategic alliances and divestures, finance future business acquisitions and obtain regulatory approvals and consents for acquisitions;

·  the performance and demand for the products and services we offer, including the level and timing of withdrawals from our collective investment products;

·  our ability to grow revenue, attract and/or retain highly skilled people, control expenses and attract the capital necessary to achieve our business goals and comply with regulatory requirements;

·  our ability to control operating risks, information technology systems risks and outsourcing risks, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will fail or be circumvented;

·  the potential for new products and services to impose additional costs on us and expose us to increased operational risk, and our ability to protect our intellectual property rights;

·  changes in government regulation or new legislation, which may increase our costs, expose us to risk related to compliance or impact our customers;

·  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 impact 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 2008 Annual Report on Form 10-K, our Current Report on Form 8-K dated May 18, 2009, 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 press release speak only as of the date hereof, 1 December 2009, and we do not undertake efforts to revise those forward-looking statements to reflect events after this date.