East Coast Firm to Buy Celebrity Money Manager

Old-line East Coast money manager and asset custodian State Street Corp. is going Hollywood--in a manner of speaking.

The firm said Thursday it will buy a majority stake in Century City-based celebrity money manager Bel Air Investment Advisors for $217 million in cash and stock.

Boston-based State Street said it will acquire a 75% stake in Bel Air and 100% of the firm’s brokerage unit as it seeks to expand its presence in the fast-growing market for wealthy clients.

Bel Air’s clients include entertainment and business figures such as Barbra Streisand, former Chrysler Corp. chief Lee Iacocca, movie mogul Jon Peters and TV talk-show host Geraldo Rivera.

Formed in late 1997, Bel Air has about $3.2 billion in assets under management for 200 individuals and families, and $600 million in client assets in its brokerage unit.

The firm will retain its current management as it becomes a subsidiary of State Street, which manages $717 billion for clients and also holds about $6.2 trillion as custodian for other investment firms.

Bel Air’s investment products thus far have focused on large-cap growth stocks and fixed-income securities. “This deal deepens our bench and our breadth,” said Todd Morgan, Bel Air’s senior partner. “We’ll be able to offer trust services, hedge funds, small-cap and international funds among other investment strategies.”

For State Street, whose high-net-worth business has been centered on the East Coast, the deal provides entree to the lucrative California market.

State Street’s shares (STT) rose 55 cents Thursday to close at $130.29 on the New York Stock Exchange, bringing their year-to-date gain to 78%.