MutualFundWire.com: PNC Acquisition of First Data's Fund Unit Creates Largest Transfer Agent
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Tuesday, July 20, 1999

PNC Acquisition of First Data's Fund Unit Creates Largest Transfer Agent


Pittsburgh-based PNC Bank has agreed to buy First Data Investor Services Group (ISG) the mutual fund subsidiary of First Data Corp. for $1.1 billion.

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    • The combination of PNC's mutual fund services subsidiary, PFPC Worldwide, with ISG will create the industry's largest transfer agent, with over 14 million full-service accounts and 20,000 retirement plans serviced, bypassing BFDS/NFDS which has approximately 11.5 million accounts. The combined units will continue to use the PFPC Worldwide name.

    "We believe this combination will create the premier one-stop shop for high-quality shareholder services, bringing a virtually unparalleled array of services to our customers," said James Fox, newly appointed president and chief operating officer of ISG. "We are pleased to be joining an organization with a strong commitment and proven track record in this business."

    "The combination of two industry leaders creates what we consider to be a 'powerhouse'," Fox told the MFWire.com. "The new company will not just be a 'me too' business, as in we have that too, but will be a real player in all areas -- in retirement services, in fund accounting and in transfer agent services."

    Fox added that the growth in the industry, as well as the 15% growth for the last ten years that ISG has experienced, with similar growth at PFPC, made the deal an especially attractive one.

    Fox will become vice chairman of PFPC Worldwide, joining J. Richard Carnall, chairman and chief executive officer of PFPC Worldwide and Vincent Ciavardini, president and chief operating officer.

    "At PNC, our strategy is to diversify into other financial services -- we're not just a commercial bank anymore," a PNC spokesperson told the MFWire.com. "This is a high-growth, fee-based business, and it's not First Data's core business, it is one of ours."

    The deal is expected to increase the relative revenue contribution of PNC's fee-based business to 55% percent this year, and 60% in 2000 from its present 50%. The acquisition is expected to close in the fourth quarter of 1999, pending regulatory approvals.

    "This is a good move for both PNC and First Data," said Geoff Bobroff of Bobroff Consulting, a Boston-based mutual fund consultant. "There have been persistent rumors for many months that First Data Investor Group's parent was looking to sell it and from Investor Services' standpoint, the outlook is much better than if it was sold to (another fund servicer like) DST, because that probably would have meant elimination for the Investor Services Group. But this gives PNC a solid base in Boston and a recordkeeping business."


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