Goldman nears hedge fund admin unit sale Goldman Sachs is close to sealing a deal with State Street over the sale of its hedge fund administration business in a tie-up that would create the largest administration services provider to hedge funds worldwide. The investment bank is in "late stage" discussions with State Street, according to people familiar with the sale, although no formal agreement has been reached. The combined business would have funds under administration of close to $700bn, overtaking current market leader Citco. Hedge fund administration - which involves accurately valuing portfolios and assessing levels of risk - has become a big business in recent years as new global regulations and investor pressure force the $2tn hedge fund industry to employ more third-party service providers. The bank has been exploring the sale of the business, which is currently ranked fourth and looks after assets of about $200bn, for several months and has spoken to a number of potential acquirers. A potential sale of Goldman Sachs Fund Administration was first reported in April. In recent weeks State Street has emerged as a clear frontrunner and a deal could be agreed by the end of the month. Goldman Sachs declined to comment. While the use of third-party fund administrators has been relatively common in Europe for years, the practice has gained currency in the US after the Bernard Madoff scandal. US fund managers are subject to increased oversight from the US Securities and Exchange Commission and most serious investors now require managers to outsource the calculation of risk and net asset value - a measure of a portfolio's total worth - to third parties. Goldman's business counts several of the world's leading hedge funds among its clients, including Och-Ziff and York Capital. In all, the business caters to more than 500 hedge fund clients and employs about 250 people worldwide, with offices in most big offshore centres. State Street's fund administration business oversees assets of just under $500bn. Interest in what was previously regarded by many as a technical and unglamorous part of the hedge fund world was piqued earlier this year by a bidding war for GlobeOp , a big fund administration business with about $173bn in assets. The London-based company was bought in May by software group SS&C for £572m - an 80 per cent premium to GlobeOp's then share price - trumping a £508m bid from TPG, the private equity house.