State Street to acquire GE Asset Management

State Street Global Advisors is planning to pay $485m in cash with the transaction expected to increase its assets under management by $100bn.

The investment management division of State Street Corporation is acquiring GE Asset Management (GEAM) for up to $485 million in cash, the firms said.

GEAM, which has more than 100 institutional clients, will add about $100 billion to the $2.24 trillion held under management by State Street Global Advisors (SSGA), according to a statement issued by the firms.

GEAM has managed investments for General Electric’s US pension and other benefit plans for more than 80 years, it said. It started offering investment management services to outside investors in 1988, with investment offerings in US and international equities, fixed income and alternative assets.

In addition to investing in private equity funds, it has also managed its own vehicles, such as GE Invest Private Placement Partners II sized at $938 million from 1995, according to PEI Research & Analytics. As of March 2015, GEAM allocated 5.08 percent to private equity, according to PEI data.

“GEAM will bring new alternatives capabilities in direct private equity and real estate to SSGA, while enhancing our existing active fundamental equity, active fixed income and hedge fund teams,” SSGA chief executive and president Ron O’Hanley said.

SSGA is targeting a 90 percent retention rate for client assets following the transaction, and expects synergies to help its internal rate of return on this investment to exceed the 11 percent target, it said.

The transaction is expected to close in the third quarter and to be accretive to operating-basis earnings per share for the first 12 months after closing, the firm added.

GE has been simplifying its business since the financial crisis. In June, GE Capital sold its US sponsor lending portfolio Antares Capital to Canada Pension Plan Investment Board for $12 billion.

A spokesperson was not available to comment.