SOMERSET, N.J. (HedgeWorld.com)–Officials with Mellon Financial Corp.’s Asset Servicing group announced plans Tuesday to buy Derivatives Portfolio Management LLC, a hedge fund administrator that oversees US$30 billion in assets for 91 clients.
Terms of the deal were not disclosed; however, Mellon spokesman Ron Gruendl said officials at both firms expect the deal to close before the end of the first quarter.
In a statement, Mellon Vice Chairman and President of Mellon Global Securities Services James P. Palermo said his firm’s acquisition of DPM improves Mellon’s position in the asset servicing industry. “DPM is one of the most successful and fastest growing firms in the hedge fund administration arena with a broad set of capabilities,” he said. “Furthermore, this acquisition enables Mellon to meet the needs of clients who increasingly are seeking custodians with hedge fund expertise.”
Immediate plans call for Mellon to expand DPM’s European operations by establishing a hedge fund administration foothold in Dublin, Ireland, where there is growing demand from international hedge fund managers. Mellon already has an asset servicing hub located there, Mr. Palermo said.
Robert M. Aaron, chairman and chief executive of DPM, said in a statement that joining Mellon would allow his firm to better serve the growing numbers of hedge fund managers who are part of large institutional asset management firms. “As hedge fund managers are becoming more institutionalized, they are turning to administrators that are part of large, well-regarded financial institutions that can provide the transparency they require,” Mr. Aaron said.
Currently Mellon has three hedge fund managers in its stable: Mellon HBV Alternative Strategies LLC, Mellon Global Alternative Investments Ltd. and Evaluation Associates Capital Markets, which it acquired last year.
None of those firms currently use DPM for administration, Mr. Gruendl said, although they might in the future depending on conclusions reached by both sides as the two firms merge.
The new firm will keep the DPM name but incorporate the Mellon brand, as well, Mr. Gruendl said.
DPM’s services include middle- and back-office outsourcing and transparency. Mellon has more than US$3.7 trillion in assets under management, administration or custody.
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