Goldman Sachs buys European asset manager for 1.6 billion euros

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Goldman Sachs’ asset management unit has agreed to buy the investment management arm of Dutch insurer NN Group for around 1.6 billion euros, the bank’s largest acquisition of Wall Street since David Solomon became CEO in 2018.

The deal for NN Investment Partners, which has $ 355 billion in assets under management, will significantly expand Goldman’s presence in European asset management and is the latest example of consolidation sweeping the industry.

It’s also a further sign of Solomon’s determination to grow the US bank in areas that generate regular commissions, such as asset and wealth management, while reducing its reliance on volatile activities. such as trading in stocks and bonds.

Solomon told the Financial Times that the acquisition “helps us evolve our asset management platform, including strengthening our position in Europe.”

Goldman Sachs Asset Management, which has $ 2.3 billion in assets under watch, defeated Frankfurt-based asset manager DWS in the final round tender to win NN Investment Partners. UBS Asset Management, Janus Henderson and the American insurer Prudential Financial had also expressed their interest.

“Everything NN does, we already do, and that adds and accelerates our growth. . . and continue to help us evolve, ”Solomon said.

Asset managers around the world are pursuit scale to protect profits from rising costs and falling fees. Solomon said Goldman would certainly “seriously consider” further acquisitions in asset management if they could accelerate its growth.

“The asset management industry continues to consolidate,” he added. “If you look at most of the major players, what most of them have is that their business is global and large-scale. “

Of NN Investment Partners’ assets under management, $ 190 billion is managed on behalf of its parent insurance company, with the remainder going to outside investors.

NN Group will now become a GSAM client, bringing the total amount of outsourced insurance advisory business it manages to $ 550 billion. “Partnering with the NN Group on their insurance assets going forward was an exciting opportunity for us,” said Solomon.

NN Investment Partners has a strong position in ESG investing, particularly in areas such as green bonds, impact stocks and sustainable stocks. “We are focused on meeting the ESG needs and wants of our clients,” said Solomon.

Goldman reported save asset management revenue in the second quarter, but only about a quarter of that was from asset management on behalf of clients – the part of the business it wants to grow.

Most of the income came from the investments Goldman had made with its own capital, a source of income the bank is trying to reduce.

The bank’s assets under surveillance stood at $ 2.3 billion at the end of June, up from $ 2.2 billion three months earlier. Goldman has set a 2020 goal for the next five years to raise $ 150 billion for alternative asset management vehicles, which include private equity, credit and real estate. The bank has recorded net inflows in asset management of more than $ 70 billion since early 2020.

The Hague-based NN Group last year came under pressure from activist hedge fund Elliott Management to improve returns and streamline operations. He said in April that he was consider options for its investment management activity, including a merger, joint venture or partial divestiture of the division, which has more than 900 employees in 15 countries.

The insurance industry as a whole is grappling with an extended period of low interest rates and higher capital requirements under Solvency II rules, prompting groups to weigh where they allocate their capital and withdraw from smaller asset management divisions.

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