Cementing its position as a top provider of mutual fund services to banks, the Bisys Group has struck a deal to acquire Concord Holding Corp.

The acquisition, valued at $120 million, vaults Bisys, a New Jersey-based banking technology firm, into first place among companies that help banks create and market mutual funds. Its bank fund assets under administration will soar to $45.2 billion, from $15.9 billion at present.

Bulking Up

Bisys Group's bank mutual fund business After Concord Now acquisitionAssets under administration $15.9 billion $45.2 billionBank clients 17 28Biggest client First of America BankAmerica Bank Corp. Corp.CEO James Richard E. Zilinski StierwaltHeadquarters Columbus, Ohio New York City

Concord, based in New York, provides mutual fund administration and distribution services for such industry leaders as BankAmerica Corp.'s Pacific Horizon Funds, Barnett Banks Inc.'s Emerald Funds, and Chase Manhattan Corp.'s Vista Funds.

Bisys, on the other hand, is a relative newcomer to the bank mutual fund business, which it entered in October 1993 with the purchase of the Winsbury Group, a Columbus, Ohio, fund administrator. Like other technology companies that have been entering the mutual fund services field, Bisys sees opportunities to expand its relationships with banks.

Winsbury, which has since been redubbed Bisys Investment Services Group, will now answer to Concord's chief executive, Richard E. Stierwalt, who has been named to head the merged organization.

James Zilinski, who was president of the Bisys unit, will now take a strategic planning position with the Bisys organization. Though some operations, such as client account services, will be kept separate, administrative and back-office functions will be combined.

The acquisition shows that mutual fund service boutiques like Concord face pressure to expand, either by purchasing other companies or being acquired by them.

By hooking up with Bisys, Concord will swiftly expand its repertoire to include offerings that are much in demand by bank mutual fund units, such as fund accounting, 401(k) plans, and transfer agency, Mr. Stierwalt said in a telephone interview.

"We were the size where we needed to internalize a lot of the services we'd been outsourcing," Mr. Stierwalt said. The merger provides "the opportunity to meet our strategic needs overnight."

The merger brings together two competitors that have been known for distinctly different strengths.

Concord is seen as an institutional fund expert, with client banks whose mutual fund operations are built largely on money market mutual funds. The company also has an international presence, making it appealing to banks that want to sell and manage mutual funds overseas.

Bisys Investment Services, on the other hand, is known chiefly for helping banks build their stock and bond mutual fund assets. Its top client, First of America Bank Corp., Kalamazoo, Mich., has roughly three-quarters of its fund assets in long-term investments, an unusually high percentage for a bank.

And Bisys Group, with its emphasis on technology, has emerged as a strong provider of back-office services to bank fund complexes. The company's chairman, Lynn J. Mangum, said the acquisition of Concord will give Bisys the economies of scale to dominate the bank fund services business.

"We're bringing stuff together that makes the whole company unbeatable in terms of products and services we'll bring to clients," Mr. Mangum said.

Industry experts agree, saying the pairing is the closest thing yet to a fully integrated distribution firm. "This is a very powerful combination," said Kurt Cerulli, principal of Cerulli Associates, Boston.

Mutual fund distributors such as Concord and Winsbury have cropped up in the past decade to perform duties that banks are forbidden to handle under the Glass-Steagall Act, including organizing mutual funds and negotiating sales agreements with brokerage firms.

But the companies have taken on other roles as well, including helping banks devise marketing strategies. One Concord client said he sees considerable benefits in the merger.

"Bisys brings some significant systems, operations and knowhow," said James Detmer, vice president of distribution for Chase Manhattan's Vista Funds. "It's going to allow us greater resources to expand distribution."

Other distributors insist there is bound to be fallout. "I'd be real surprised" if some of the clients don't leave, said Arthur J. Lucey, vice president at ALPS Mutual Fund Services, Denver.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.