- Goldman Sachs Group Inc. agreed to buy the holding arm of Dutch insurer NN Group NV as the bank gains a stake in the fast growing sustainable investment industry and increases its European ties.
The U.S. lender will pay about 1.6 billion euros for NN Investment Partners, according to a statement on Thursday. The unit has around $355 billion of assets under supervision, with about three-quarters of its investments supported by environmental, social and governance criteria.
NN's sustainability effort mirrors our own level of ambition to place responsible investing and stewardship at the heart of our business, Goldman Sachs said in the statement. 'This acquisition allows us to expand our growth strategy and accelerate our asset management platform.
Asset Management is experiencing a wave of consolidation across the globe as scale becomes an ever more important part of an industry facing growing margin pressures. Most players are seeking more exposure to growth markets like ESG investing, passive funds and private assets.
The deal also marks the latest expansion of Goldman's European operations. Post Brexit, the Wall Street firm has shifted billions of dollars in assets and hundreds of staff to London offices across the European Union, including in Paris, Frankfurt, Milan and Madrid, although its London operations dwarf those on the continent.
The acquisition is further proof that the financial industry can no longer afford to treat ESG as an afterthought. The market for goods which claim to promote social justice and a greener planet is already estimated at $35 trillion annually and is likely to surpass $50 trillion by 2025, according to Bloomberg Intelligence.
Still, much of what is sold under the ESG label is vague and hard to measure: In Europe, stricter regulations forced the finance industry to strip the label from $2 trillion in assets between 2018 and 2020.
NN's investment arm was put up for sale following a strategic review in April and was said to draw early interest from firms including UBS Asset Management, Assicurazioni Generali SpA and Allianz SE. The deal comes after activist investor Elliott Management Corp. heaped pressure on the Dutch insurer to unlock more value for shareholders, calling on the firm to raise its holdings of private assets, cut costs and boost capital through asset sales.
Several other asset managers have changed hands recently, as banks and insurers sell subsidiary units that aren't able to compete with the largest international fund houses. The biggest European asset manager, France's Amundi SA bought the Lyxor unit of Societe Generale SA in April to expand in exchange traded products. In June, Allianz parent Pimco said it wanted to play an active role in the consolidation of the industry.
Goldman said in its statement that the transaction will see the Netherlands become a'significant location for our European business. Under the contract, NN Group and Goldman Sachs Asset Management will enter into a 10 year partnership where the combined company will continue to provide asset management services to NN Group. Satish Bapat, chief executive officer of the insurer's investment arm, will step down with immediate effect from NN Management Board and continue to lead NN Investment Partners.
Following this transaction, NN Group expects to have additional capital which will be available for additional returns to shareholders over time unless used for value-creating opportunities, the Dutch company said.
The deal is expected to be completed by the first quarter of next year.