GERMANY -- BHW Invest, a German asset manager specialising in the so-called master fund concept, is to be sold to US information technology giant EDS.

It is understood that a deal would be finalised by the start of 2005 under which EDS will acquire a majority stake in BHW Invest. The sum to be paid is not yet clear.

The asset manager is a joint venture between German building society BHW, Germany’s BHF-Bank and BGAG, an investment company founded by German labour unions. Each partner has one-third of the asset manager.

The deal marks EDS’ first acquisition of an asset manager in Germany. However, industry sources noted that the US firm is already very well represented in the German financial industry, offering IT and business process services to banks.

While BHW Invest is not a major player in the German asset management industry, it distinguished itself in 2002 with the high-profile launch of its master fund concept for German institutional investors. In a master fund, back-office administration of all institutional funds are centralised within one provider, reducing costs while boosting efficiency.

BHW Invest’s move prompted several other well-known asset managers like JPMorgan Fleming to follow suit. All told, there are around 14 master fund providers in Germany.

However the industry continues to be dominated by Univesal Investment, which first pioneered the master fund concept in 1990. According to Universal, more than half of its €43bn in institutional assets are managed in master funds.

Owing in part to this innovation, BHW Invest aims to attract €4bn in investor inflows by the end of 2005. Currently, it has around €2bn in assets under management (AUM), almost all from institutional clients.

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