State Street Buys Goldman's Hedge Fund Admin Unit for $550 million

State Street Corp announced it bought Goldman Sachs' hedge fund administration unit for $550 million, a move the firm says should give its sagging earnings a boost over the segment's first full year of operations.

The firm said that the deal is expected to close early in the fourth-quarter this year, pending regulatory approval. State Street added that under the Goldman Sachs umbrella, its new acquisition administered nearly $200 billion in hedge fund assets on behalf of around 150 clients. The Goldman employees who operated the unit, are expected to joint State Street once the deal closes, the company said.

"Servicing alternative assets remains a strategic focus for State Street," said George Sullivan, the global head of State Street's alternative investment solutions division. "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."

Prior to the deal, State Street ranked as the top servicer of alternative assets in the world with $877 billion under management as of June 30.

Meanwhile the announcement comes following news that State Street's second-quarter earnings sank 4 percent from the year-earlier period due to falling FX trading volumes and overall weakness in the global markets. And Goldman's decision to sell its hedge fund administration unit comes with the firm enduring struggles of its own.

The firm, which is still slashing jobs and cutting other costs wherever possible, said on Tuesday that its second-quarter earnings plunged 12 percent from a year ago with equity underwriting and merger advisory activity continuing to slump.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio