Mellon Financial is looking for a solution for its Human Resources and Investor Solutions business, The Post has learned.
Pittsburgh-based Mellon has hired Citigroup to explore a possible sale of the business – which provides consulting, administration and outsourcing services – for as much as $1 billion, sources familiar with the matter said.
The investment bank is distributing an offering memorandum to potential buyers.
A Mellon spokesman wasn’t immediately available for comment.
HR&IS provides human-resources support in such areas as retirement, employee benefits and communications, as well as shareholder services such as mergers and acquisitions, corporate restructuring and employee stock-purchase plans.
Sources familiar with the business say there is a limited pool of logical buyers for the entire operation, and it is possible the business may be sold in pieces.
Potential suitors for all or part of the unit may include consulting firms Convergys, Hewitt Associates and Watson Wyatt, which would be particularly interested in the human-resources part of the business, sources noted.
Meanwhile, the investor services-related business might appeal to financial institutions such as Bank of New York, Northern Trust and State Street Corp.
Deep-pocketed private-equity firms are said to be eyeing the asset as well, sources said. Firms such as Texas Pacific Group, Hellman & Friedman and Silver Lake Partners – which have invested previously in the technology and business processing sectors – are expected to take a look.
Based on the HR&IS unit’s revenue, several executives familiar with the process expect Mellon to fetch about $1 billion for the business.
However, the unit’s relatively low profitability may hinder its ability to achieve that price goal, one source said.
Last year, Mellon reported revenue of $972 million for its HR&IS unit, but only $56 million of pretax profit.
A sale of HR&IS unit would be the latest move by Mellon to divest noncore businesses and transform itself into a pure-play asset-management company.
After spending more than 130 years as a traditional retail bank, Mellon is refocusing on providing fee-based services to institutions, corporations and high net-worth individuals.