State Street agreed to acquire Mercatus to add private-markets coverage to its portfolio management servicing unit for investors and money managers on Wednesday.
In conjunction with the Mercatus acquisition, State Street plans to launch State Street Alpha for Private Markets that would allow a range of investors, including asset owners and investment managers to "manage the entire lifecycle of their infrastructure, private equity, real estate, private debt and funds-of-funds investments through a fully integrated, digital front-to-back, single platform," it said in a news release Wednesday. .
The deal is expected to close in September, State Street spokesman Edward Patterson confirmed in an email. He said financial terms of the deal were not being disclosed.
"Investors in private markets have historically struggled with inefficient and manual processes because existing solutions are too fragmented and rigid to meet their changing investment requirements," said Spiros Giannaros, president and CEO of Charles River Development, a State Street company that provides front- and middle-office software technology.
Three years ago, State Street joined Charles River's public markets front- and middle-office data capabilities for public market investments with the bank's middle- and back-office services, Mr. Giannaros said in an interview, noting that the addition of Mercatus "is an extension of what we are doing to include private market investments. Mercatus plugs the gap."
A driver behind State Street's acquisition of Mercatus is the recognition of the high demand from investors for private market strategies, said Paul Fleming, executive vice president and global head of State Street's alternatives segment, in an interview.
"We are positioning ourselves to capture more business from alternative investors and managers. Private-market strategies are complex and often very customized and higher service fees will reflect that complexity," Mr. Fleming said.
In the release, State Street said its private markets Alpha solution would also provide cloud-based asset management, deal management, ESG, investor relations and portfolio monitoring, "allowing clients to make faster decisions as well as improve client service levels with better responsiveness and transparency."
Mercatus manages $1 trillion of invested capital for its global private markets client base, the release said.
State Street had $42.6 trillion in assets under custody and/or administration and $3.9 trillion in assets under management as of June 30.