STT State Street Corporation

   (FROM THE WALL STREET JOURNAL 3/31/16) 
   By Sarah Krouse and Anne Steele 

State Street Corp. has agreed to buy General Electric Co.'s asset-management unit for as much as $485 million as the Boston-based firm works to add scale to its money-management division.

The business, which includes GE's U.S. benefits plans as well as assets for third-party institutional clients, manages more than $100 billion in assets. The cash deal will give State Street Global Advisors, known for its index-tracking funds, a broader mix of money-management abilities, including private-equity and real-estate investments.

The deal comes as GE continues to make strides to leave the financial business by shedding GE Capital assets. Since announcing its dismantling plan last April, GE has signed some $161 billion in deals.

State Street's money-management business had $2.2 trillion in assets at the end of 2015 and includes a large lineup of exchange-traded funds, funds run by stock- and bond-pickers and hedge funds. The deal is poised to help State Street grow in the business of managing money for insurers and defined-benefit plans that outsource portfolio management.

Companies are increasingly switching to workplace retirement plans in which employees stash money during their careers, rather than receiving a guaranteed payout from so-called defined benefit plans. As those plans wind down, firms are asking money managers to help them manage the remaining assets and liabilities.

Ron O'Hanley, chief executive officer of State Street Global Advisors, said that growing the portion of the firm's business that helps companies and endowments that outsource investment decisions was a priority.

"There's a lot of appeal in the way they put together portfolios," using internal investment strategies and outside money managers, he said of GE's benefits plans. Mr. O'Hanley added that the deal bolsters SSGA's alternatives and fixed-income expertise.

GE Asset Management put in place a staff-retention program late last year to keep in place what the firm described as "key investment professionals and employees."

Mr. O'Hanley, who previously headed Fidelity's asset-management business, joined SSGA early last year and has said he plans to expand the business in part through mergers-and-acquisition activity. This is his first deal at the firm.

The company said it expects the GE asset-management deal to generate up to $300 million in revenue from the deal in the 12 months after its completion. The deal is expected to close in the third quarter.

(END) Dow Jones Newswires

March 31, 2016 02:47 ET (06:47 GMT)

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