State Street has entered into a definitive agreement with Brown Brothers Harriman & Co. (BBH) to acquire the latter’s Investor Services business for a total of $3.5bn in cash.
The acquisition includes custody, accounting, fund administration, global markets and technology service units of the Investor Services business.
BBH Investor Services is a provider of asset services with deep expertise in cross-border, alternatives, ETFs, and other high-growth asset classes.
The acquisition adds BBH Investor Services’ $5.4 trillion in Assets Under Custody (AUC) as of 30 June 2021 to State Street’s $31.9 trillion in AUC.
Also, the acquisition will help State Street to expand its presence in non-US markets, including in developed markets such as Japan, Luxembourg, Ireland and Latin America.
State Street chairman and CEO Ron O’Hanley said: “The Investment Servicing industry enjoys strong fundamentals as worldwide growth in financial assets drives industry revenues.
“This combination with BBH Investor Services helps us consolidate our position as the industry innovator and leader.
“We are enhancing our leadership position across a range of services, augmenting our position in a number of key markets, growing relationships with many of the leading global asset managers and owners, and increasing our capabilities and scale.
“Additionally, BBH Investor Services brings us strong talent, including industry-leading service excellence and quality execution.”
The transaction is expected to close by the end of this year, subject to regulatory approvals and customary closing conditions.
Upon closing of the transaction, BBH will continue to operate its separate Private Banking and Investment Management businesses.
BBH Investor Services employees will be transitioned to State Street, including the team of senior management, moving into State Street’s executive leadership roles.
BBH Investor Services global head and partner Seán Páircéir will be appointed as the member of the State Street Management Committee.
The acquisition is expected to advance State Street’s strategy by strengthening competitive positioning, expanding geographic coverage and enhancing the client experience.
Goldman Sachs served as a financial advisor and Davis Polk & Wardwell as a legal advisor to State Street on the transaction, while Lazard served as a financial advisor and Sullivan & Cromwell as a legal advisor to BBH.
BBH managing partner Bill Tyree said: “We made this decision after careful consideration of the current and future landscape of the global securities servicing industry, including how best to support and innovate for the growing breadth and complexity of our clients’ servicing requirements.
“State Street is the ideal partner – a firm that shares our core values of unmatched client service, integrity, trust, and a long-term commitment to sustainability.”
