The Bank of New York Mellon Corp. said it is acquiring the global investment-servicing business of The
PNC Financial Services Group Inc.
BNY Mellon is paying $2.31 billion in cash for PNC Global Investment Servicing Inc. The
trust bank is stumping up $1.57 billion for the unit's business stock and intercompany debt. It will also raise $800 million in equity as part of the transaction. The deal is expected to close sometime in the third quarter.
PNC has been shopping PNC Global Investment Servicing for about three months. The unit, which employs approximately 4,500 workers, offers a wide range of back office services -- utilized by many financial advisory and wealth management firms -- across a number of its core businesses, namely AdvisorCentral, Albridge Solutions and Coates Analytics.
In total, PNC GIS's fund accounting and administration, custody, transfer agency, alternative-investment, subaccounting, managed-account and wealth-management-reporting services, represent some $2.2 trillion in total assets.
Stephen Wynne, current CEO of PNC Global Investment Servicing, will remain in that role, reporting to Tim Keaney and Jim Palermo, co-heads of
BNY Mellon Asset Servicing.
In discussing the deal during a conference call Tuesday,
BNY Mellon chief executive Robert Kelly said the sheer size of the PNC unit was an attraction. “The former PNC business is the last scale business in the United States in securities servicing,” he noted.
Despite some overlap from PNC's subaccounting clients and BNY clients, PNC's back-office processing unit would seem to be a nice fit with BNY's existing businesses. “It's complementary to asset servicing, our alternative-investment service, as well as to Pershing,” said Mr. Kelly.
Indeed, Albridge Solutions data aggregation tools should slot nicely with Pershing LLC,
BNY Mellon's global clearing and wealth management service. Likewise, Coates Analytics Group LP will provide Pershing with “differentiating decision support analytics solutions,” according to a statement from
BNY Mellon management.
“We’re both leading firms today in our respective businesses, and we’re really excited to be combining in a way that will advantage both of our customer bases, and help support their growth,” Brian T. Shea, president and chief operating officer, Pershing LLC, said.
The deal will also allow Pershing to offer more multicustodial capabilities, he noted, by leveraging the technology from Albridge. “Many Pershing customers already use Abridge,” Mr. Shea said. “We can create combined solutions which would advantage the Pershing customer base and Albridge’s, regardless of whether they use Pershing for custody.”
PNC acquired both Albridge and Coates Analytics in 2007.
When the Global Investment Servicing acquisition is wrapped up,
BNY Mellon will be the No. 2 provider of fund accounting, administration and transfer agency services to fund managers globally. In addition, the deal will increase the company's assets under custody by approximately $460 billion and double the number of funds serviced for accounting and administration.
“It bulks up our product capabilities for our clients,” Mr. Kelly said.
