State Street Global Advisors is reportedly exploring acquisitions or partnerships with a private credit or infrastructure manager as it seeks to expand in alternative assets, a market that has been increasingly appealing to investors.
Yie-Hsin Hung, chief executive of State Street’s asset management arm, confirmed to the Financial Times that the firm is considering either full acquisitions or minority stakes to bolster its private credit offerings.
“We are shopping,” Hung said, emphasizing that the firm could benefit from partnerships or investments in established firms that would enable it to offer new products to clients seeking diversified investments beyond traditional public markets. Currently, alternative investments represent less than 5 percent of State Street Global Advisors’ $4.7 trillion in assets under management.
Hung, who took on her role roughly two years ago, acknowledged that while State Street’s ETF offerings helped launch the passive investment market in 1993, it has been slower than some competitors to capture recent trends in actively managed ETFs and private credit.
Pointing to the size of State Street's clients and how they'd need to make meaningfully sizeable investments, she said that partnering with a more experienced alternative asset firm, either as a partner or minority stakeholder, “makes more sense for us ... where it’s one plus one equals three.”
The asset manager is already dipping its toes into private credit via a partnership with Apollo to launch a number of private-credit ETFs. That venture, still in proposal form, is set for approval by the SEC.
On other fronts, State Street Global Advisors has launched over 80 new products and last year recruited Anna Paglia, formerly of Invesco, as its chief business officer. The firm has also collaborated with Galaxy Asset Management to introduce actively managed ETFs focused on digital assets and disruptive technologies.
In July, State Street joined a coalition of strategic investors in a take-private acquisition deal for Envestnet. The other figures in that $4.5 billion transaction, led by private equity giant Bain Capital, include Fidelity Investments, Franklin Templeton, and BlackRock, the global asset management titan currently boasting $11.5 trillion in assets.
BlackRock is arguably the largest asset management player State Street will have to contend with in its push into private credit. The Larry Fink-led firm has already made several strategic moves into the space, including its purchase of Global Infrastructure Partners earlier this year and, more recently, opened a channel with private credit manager HPS, which is weighing an IPO, a minority stake sale, or being bought outright by BlackRock.
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