Investment management company Invesco is reportedly pursuing talks to merge with the asset management unit of State Street.
Discussions between the companies are at an early stage and a deal may not materialise, the Wall Street Journal reported citing people with knowledge of the development.
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While terms of the potential deal are not clear yet, it is expected to be one of the biggest in the recent past.
State Street’s asset-management arm is said to oversee around $4trn in assets.
State Street Global Advisors, its investing division, specialises in exchange-traded funds (ETF).
In December last year, Bloomberg reported that the firm was reviewing various strategic alternatives for its asset management arm, including a merger with UBS and Invesco.
After weighing various options, State Street executives conceded that the business needs to be bigger in order to stay competitive.
Merging with a rival was considered the best way ahead for the unit.
Invesco, with a large ETF business, manages $1.5trn in assets. It has a market value of about $11bn.
Both State Street and Invesco did not comment on the news.
Earlier this month, State Street entered into a definitive agreement to buy investor services business of Brown Brothers Harriman & Co. in a cash deal valued at $3.5bn.
Increasing consolidation in the financial space
The pace of consolidation activities has accelerated in the asset-management industry in recent times.
To offset diminishing profit margins, asset managers have been looking to bring down expenses and lower investment management fees through deals with rival firms.
In August this year, Geneva-based wealth managers Pleion and Probus filed a request for authorisation to proceed with their merger.
