State Street is to acquire DST's mutual fund portfolio accounting service business. Terms of the transaction were not disclosed.
The business utilises DST's Portfolio Accounting System (PAS), an integrated system that automates mutual fund accounting and investment management record keeping processes such as security pricing and dividend calculations, income and expense accruals, securities inventories, accounting for daily shareholder activity and calculation of daily net asset values. PAS supports investment accounting for mutual funds, private accounts, variable annuities, separate accounts, unit trusts, insurance portfolios, and pooled trust accounts.
"With the acquisition of DST's state-of-the-art accounting servicing business, we are adding an important new dimension to the services we provide our existing clients," says Ronald Logue, vice chairman, chief operating officer of State Street Corporation and head of investor services.
Under the terms of the agreement, DST will provide data processing support for PAS and State Street will hire approximately 85 employees of the business. PAS currently provides each client with essential data processing components to support automated investment accounting, including application processing, system support, maintenance and software development. Clients control data entry, operator access, transaction processing, and output production.
Tom McCullough, executive vice president and chief operating officer of DST, insists that the transaction has no impact on DST's core business of mutual fund shareholder accounting. "This business is independent of DST's mutual fund transfer agency business," he says.
The deal is expected to close in June 2001, subject to regulatory approvals.