State Street, the US financial services group, is to expand its fund administration business in the alternative investments sector with the acquisition of Mourant International Finance Administration, it announced yesterday.

The size of the transaction, which is being financed in cash, was not disclosed. The deal is expected to close, pending regulatory approval, in the first quarter of next year. State Street said it expects the transaction to be “slightly accretive to 2010 earnings, excluding one-time costs”.

The deal underscores how the administration of alternative investment assets, managed by hedge funds and other groups, continues to be a growth area, despite the buffeting inflicted by the financial market turmoil.

MIFA is headquartered in Jersey in the Channel Islands with approximately $170 billion in assets under administration and approximately 650 employees in locations including Dublin, Singapore and New York.

“The combined State Street and MIFA businesses will rank No. 1 in alternative asset servicing globally; No 1 in private equity servicing globally; No 1 in real estate asset servicing globally and No 2 in hedge fund servicing globally, based on industry survey data,” State Street said.

The deal comes after State Street and Morgan Stanley announced that the firms had agreed a deal under which State Street. State Street will provide investment manager operations outsourcing services for approximately $300 billion in assets for Morgan Stanley Investment Management. State Street will absorb 100 employees from the Morgan Stanley unit as part of the deal.