The acquisition, from BHF-BANK Aktiengesellschaft and Sal. Oppenheim jr. & Cie. S.C.A. for EUR253 million (US$343 million), is subject to regulatory approvals, and includes the purchase of BHF Asset Servicing’s wholly-owned fund administration affiliate, Frankfurter Service Kapitalanlage-Gesellschaft mbH (FSKAG).
BHF Asset Servicing and FSKAG will become part of BNY Mellon’s Asset Servicing business. The new combined German business will have EUR473 billion (US$642 billion) in assets under custody (including €33.1 billion held by FSKAG) and administration, and a depotbanking volume of EUR120 billion (US$163 billion). BNY Mellon becomes the #2 provider by assets held in this key European market, the world’s fourth largest economy, according to the announcement. In addition, the acquisition expands BNY Mellon’s existing capabilities to encompass the provision of German domestic custody and KAG fund administration.
The new BNY Mellon Asset Servicing business in Germany will offer a range of tailored solutions for investment companies, financial institutions and institutional investors. It will be headquartered in Frankfurt am Main and have 340 staff. It will be headed by Michelle Grundmann from BNY Mellon, and Juergen P. Frank and Christopher V. Friedrich from BHF Asset Servicing. They will report to Nadine Chakar, Head of Europe, Middle East & Africa (EMEA) at BNY Mellon Asset Servicing.
The transaction is expected to be immediately accretive to GAAP EPS, providing an IRR of between 17% and 19%, according to a press release. It is scheduled to close in the third quarter of 2010 and will be funded internally.
Tim Keaney, Chairman of Europe at BNY Mellon and co-CEO of BNY Mellon Asset Servicing, said in announcing the move: “This transaction expands our capabilities and market share in one of the world’s largest fund markets, positioning BNY Mellon at the forefront among securities servicing providers in Germany and creating a strong platform for growth across our businesses.”
BNY Mellon has been serving clients in Germany since 1931, and following this transaction will have 560 people in Germany, according to the announcement. In addition to asset servicing, depotbanking and asset management, BNY Mellon is active in Germany in the areas of corporate trust, treasury services, depository receipts and client management. It has over 100 institutional relationships in Germany and offers regional coverage for 14 countries in the German speaking and Central Eastern and South Eastern European region, according to the firm.
BHF Asset Servicing has EUR315 billion (US$427.5 billion) assets under custody and administration and a depotbanking volume of EUR94.4 billion (US$128 billion). FSKAG administers assets valued at EUR33.1 billion (US$44.9 billion).