State Street Corp. agreed to buy General Electric Co.’s asset management unit for as much as $485 million in cash to expand alternative investments such as private equity and real estate.
The purchase of GE Asset Management will add about $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.
As part of the deal, State Street will manage assets of the GE pension plan that are currently overseen by GE Asset Management, according to a statement from the Fairfield, Connecticut-based company. The existing team at the asset management unit is expected to join State Street, except for a small number of employees who will stay with GE to oversee the company’s primary benefit plans.