State Street Corp. agreed to by GE Asset Management for as much as $485 million in cash to expand alternative investments such as private equity and real estate.
The purchase will add $100 billion in assets overseen for institutional clients, including retirement plan sponsors, foundations, endowments, sovereign wealth funds and insurers, according to a statement today from Boston-based State Street.
The deal “will bring new alternatives capabilities in direct private equity and real estate,” Ron O’Hanley, who heads State Street’s asset management unit, said in the statement.
O’Hanley, a former executive at Fidelity Investments who pushed that firm into new areas, took over State Street’s $2.25 trillion money management unit last year. Once the top provider of exchange-traded funds, State Street lost ground in recent years to BlackRock Inc. and Vanguard Group Inc., which have attracted more client money with new offerings and low fees.
State Street said it plans to issue preferred shares before the transaction closes, which is expected to happen in the third quarter, to offset the impact on its leverage ratios. The bank expects merger and integration costs of $70 million to $80 million through 2018.