GE and State Street Corporation Announce Agreement for State Street to Acquire GE Asset Management for up to $485 Million
GE [NYSE:GE] and State Street Corporation [NYSE:STT] today announced an agreement for State Street to acquire GE Asset Management (GEAM), GE's investment management arm, for up to $485 million, subject to adjustments. This announcement follows GE's previous announcement in September that it would explore opportunities to sell GEAM to another leading investment management firm.
The sale, part of GE's transformation to focus on its industrial core, will bring GEAM's capabilities to State Street Global Advisors (SSGA), augmenting and enhancing SSGA's investment expertise in areas complementary to its existing capabilities, including active management, as well as in alternative assets and Outsourced Chief Investment Officer (OCIO) mandates. It is also expected to increase SSGA's assets under management by approximately $100 billion, as it assumes responsibility to manage the assets related to GE's primary benefit plans currently managed by GEAM—including the GE pension plan—in addition to those of GEAM's third-party client base, subject to client consents. The existing GEAM team is expected to join SSGA as part of this transaction, with the exception of a small number of GEAM employees who will stay with GE to provide investment oversight of GE's primary benefit plans. To provide a smooth transition for clients, the core investment and relationship management teams serving GE's benefit plans and other clients will continue to do so as part of SSGA following the closing.
"This sale is another example reflecting the attractiveness of GE's financial services businesses in the marketplace," said GE Chairman and CEO Jeff Immelt. "In addition, it presents a great opportunity for GE's primary benefit plans to benefit from the world-class capabilities of SSGA. Most importantly, SSGA meets all the criteria GE originally established for the firm that would acquire GE Asset Management, including considerable experience managing retirement assets, investment and fiduciary expertise, a strong performance track record, and scale and distribution leadership."
Dmitri Stockton, Chairman, President and CEO of GEAM, said, "SSGA is another outstanding investment firm with an expanded distribution network and $2.3 trillion in assets under management. This transaction will allow our firm to bring its active and alternative asset management capabilities to an even broader investor base, and enhance SSGA's ability to grow its presence in the pension plan outsourcing segment. GE Asset Management has extensive, long-term experience in pension plan management and outsourcing offerings with a more than 80-year heritage as a provider of these services."
"As defined benefit plans – both private and public – undergo change, GEAM's skills coupled with SSGA's existing capabilities will position us well to provide effective solutions and outcomes to these investors," said Ron O'Hanley, President and Chief Executive Officer of SSGA. "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. In addition, GEAM's OCIO and Insurance platforms significantly strengthen our capabilities in these fast growing areas."
An independent fiduciary, Evercore Trust Company, N.A., has reviewed the transaction and approved SSGA's engagement to manage the assets related to the GE pension plan currently managed by GEAM. GE will retain responsibilities as plan sponsor and fiduciary for its plans going forward. Net sale proceeds from the transaction will be deposited into the GE Pension Trust, increasing trust assets used to pay GE pension plan benefits.
As the transaction proceeds, GEAM will maintain its commitment to fulfilling all of its obligations to its clients. GEAM and SSGA expect no impact on their ability to provide strong investment performance and service to investors through and following the close of the deal.
The sale, which is expected to close in the third quarter of this year, will not change the benefits received by participants in the GE pension plan (or any affiliate pension plan), and does not change GE's requirement to meet its pension funding obligations.
GE is being represented in this transaction by Credit Suisse. The deal is subject to any and all customary and regulatory approvals.
GEAM is a wholly owned subsidiary of GE, separate from GE Capital.
About GE Asset Management
GE Asset Management Incorporated (GEAM) is a global asset manager with $110 billion in assets under management (as of December 31, 2015). GEAM and its predecessor organizations have been managing investments for GE's U.S. pension and other benefit plans for over 80 years. In 1988, the firm began offering investment management products and services to investors outside GE, and today manages portfolios for more than 100 institutional clients—including corporate and public retirement plan sponsors, foundations, endowments, sovereign wealth funds, insurance companies, and GE affiliates. GEAM also manages portfolios for GE employees and other individual investors through its mutual fund platform. Investment offerings cover all major asset classes, including U.S. and international equities, fixed income and alternative assets. Assets are invested side-by-side with the corresponding GE benefit plan portfolios and managed by the same investment professionals, aligning GEAM's interests with those of its clients.
GE (NYSE: GE) is the world's Digital Industrial Company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive. GE is organized around a global exchange of knowledge, the "GE Store," through which each business shares and accesses the same technology, markets, structure and intellect. Each invention further fuels innovation and application across our industrial sectors. With people, services, technology and scale, GE delivers better outcomes for customers by speaking the language of industry. www.ge.com
About State Street Corporation
State Street Corporation (NYSE: STT) is the world's leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $28 trillion in assets under custody and administration and $2 trillion* in assets under management as of December 31, 2015, State Street operates globally in more than 100 geographic markets and employs 32,356 worldwide. For more information, visit State Street's website at www.statestreet.com.
About State Street Global Advisors
For nearly four decades, State Street Global Advisors has been committed to helping our clients, and those who rely on them, achieve financial security. We partner with many of the world's largest, most sophisticated investors and financial intermediaries to help them reach their goals through a rigorous, research-driven investment process spanning both indexing and active disciplines. With trillions* in assets, our scale and global reach offer clients access to markets, geographies and asset classes, and allow us to deliver thoughtful insights and innovative solutions.
State Street Global Advisors is the investment management arm of State Street Corporation.
*Assets under management were $2.24 trillion as of December 31, 2015. AUM reflects approx. $22.0 billion (as of December 31, 2015) with respect to which State Street Global Markets, LLC (SSGM) serves as marketing agent; SSGM and State Street Global Advisors are affiliated.
Caution Concerning Forward-Looking Statements
This document contains "forward-looking statements" – that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see http://www.ge.com/investor-relations/disclaimer-caution-concerning-forward-looking-statements as well as our annual reports on Form 10-K and quarterly reports on Form 10-Q. We do not undertake to update our forward-looking statements. This document also includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.