UBS is expanding its hedge fund services business by acquiring the US prime brokerage operations of ABN AMRO for USD 250 million.
The prime brokerage business that UBS is acquiring from ABN AMRO operates in several major US locations, including New York, San Francisco, Dallas and Boston. It has 190 employees, 80% of whom are located in New York, and serves approximately 300 hedge fund clients.
UBS stated: "This client base, mainly focused on smaller US hedge funds, provides an excellent complement to UBS's existing Hedge Fund Services business, of similar scale but focused on larger hedge funds. Acquiring these primarily exclusive relationships with developing hedge funds will instantly boost UBS's client pipeline. The combination will deliver substantial synergies through combining the two business platforms. "
John Costas, Chairman and CEO of UBS Investment Bank said: "This transaction presents an opportunity to accelerate our Hedge Fund Services business strategy by building relationships with clients at an early stage of their growth. Through this acquisition UBS will become the primary broker for a new group of hedge fund clients. Expanding into this new client segment is one of our key strategic priorities for growth."
Hugh Scott-Barrett, Member of the ABN AMRO Managing Board, said: "This decision has been taken as part of our strategy to focus increased resources on a more limited range of core activities within our Wholesale Clients (WCS) business and to ensure our product offering is fully aligned with our client-led model."
Kristen Fletcher, ABN AMRO WCS Country Representative in the US, said: "By concentrating our resources into core products we believe that we can offer our target clients, services and products, that are built on our global strength. ABN AMRO is the largest foreign bank in the US and following this transaction its Wholesale Clients business will continue to employ over 2000 staff in the US."
The transaction is expected to close in the fourth quarter, subject to usual regulatory approvals and the combined unit will form part of the Equities business of UBS's Investment Bank.
Background Note: UBS is one of the world's leading financial firms. UBS is also the world's largest wealth manager, a premier investment banking and securities firm, and one of the largest global asset managers. In Switzerland, UBS is the market leader in retail and commercial banking. UBS, headquartered in Zurich and Basel, employs more than 68,000 people, and has operations in over 50 countries and in all major financial centres.
Netherlands-based ABN AMRO is the largest foreign bank operating in the US, measured by assets (source: Federal Reserve July 2003).
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