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.
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