State Street expands fund services business to include infra

The firm believes the asset class could be ‘significantly bigger than the hedge fund industry’, having hired GIP’s Kyle Alexander earlier this year to help with the expansion.

State Street Corporation’s fund administration business has expanded its real estate fund services group to include infrastructure, as more institutional investors and fund managers seek exposure to the asset class.

The Boston-based firm has created a real assets fund services group, a “launch and expansion” of its existing real estate platform, Scott Carpenter, State Street’s head of private equity and real assets fund services, told Infrastructure Investor.

“As we look at upcoming trends and needs for investment, infrastructure looks like the next great frontier for investors,” Carpenter said. “Some projections put future global demand for infrastructure at more than $70 trillion, and assuming that private capital could meet maybe a quarter of that, you’re looking at an asset class that could be significantly bigger than the hedge fund industry.”

Carpenter said the clients State Street is seeking range from boutique firms – specialising in infrastructure, real estate or both – to large, diversified asset managers that have already launched or are launching infrastructure programmes. The “core offering” of the real assets group includes fund accounting and general ledger maintenance, debits and credits, as well as financial reporting, investor services and treasury functions.

State Street offers lines of credit to fund managers as well, he said.

Earlier this year, State Street hired Kyle Alexander from Global Infrastructure Partners to help with their real assets initiative. At GIP, Alexander worked as senior controller of the firm’s flagship infrastructure funds.

“When you look at the size of infrastructure demand, versus the amount of funds that are actually being raised to focus on the asset class, it looks like we’re still early in the curve,” Carpenter said. “That’s the right time for us to launch and build out this capability to be first and best to market with a differentiated fund admin offering.”