Citigroup has signed an agreement to acquire Bisys Group, Inc. for US$1.45 billion in an all-cash transaction.

The acquisition of the investment services division of Bisys, which includes the fund services and alternative investment services businesses, Citigroup says it will become a market-leading provider of hedge fund and mutual fund services as well as a top-tiered administrator for the private equity industry.

At closing, Citigroup will sell the retirement and insurance services divisions of Bisys to affiliates of J.C. Flowers & Co. LLC, making the net cost of the transaction to Citigroup approximately US$800 million.

The transaction is expected to close in the second half of this year and is subject to Bisys shareholder approval and to regulatory approvals in the United States, Ireland and Bermuda. The transaction is expected to be neutral to earnings per share in the first year and accretive thereafter.

“Bisys and Citigroup are a great fit. Bisys’ Investment Services division propels Citigroup into a market leading position in hedge fund administration and mutual fund servicing, and integrating it into Citigroup’s global network will extend our full service client platform and reaffirm our focus on serving the needs of high growth markets including private equity and hedge funds,” said Michael Klein, co-president of Citigroup markets and banking. “Bisys’ clients will now have access to the full suite of Citigroup’s industry leading banking and capital markets solutions.”

“In addition to demonstrating Citigroup’s continued commitment to investing in high-growth areas of our business, this acquisition enhances our fund of fund and mutual fund servicing capabilities while establishing Citigroup as a leading provider of private equity fund services. Citigroup is committed to integrating this new operation into a world class, scaleable business and enhancing our innovative service offering to new and existing Citigroup clients,” said Tom Maheras, co-president of Citigroup markets and banking.

“Citigroup will enable us to offer our clients access to the full platform of capital markets and global banking solutions,” said Robert Casale, chairman of the board, interim president and CEO at Bisys Group. “The combination of Citigroup’s expertise, resources and client relationships with our operational capabilities, client base and experience in the mutual fund and alternative investments arena will be very formidable.”