Goldman Sachs Group Inc., the investment bank that generated 15 percent of its revenue from asset management last year, agreed to buy Deutsche Bank AG’s stable value business to expand in defined-contribution plans.
The purchase of the unit, with $21.6 billion in assets under supervision, is expected to be completed in the first quarter of next year, New York-based Goldman Sachs said today in a statement. The price wasn’t disclosed.
The deal will build on the firm’s expansion into stable value funds that began last year with the acquisition of Burlington, Vermont-based Dwight Asset Management from Old Mutual Plc. The bank is seeking a bigger share in the U.S. retirement market, where assets have surged more than 60 percent to $19.5 trillion since 2000, according to data from the Investment Company Institute in Washington.
“The expert talent and potential client relationships that we gain from this transaction will complement our existing stable value business,” Eric S. Lane and Timothy J. O’Neill, co-heads of Goldman Sachs’s investment-management unit, said in the statement.
Stable value funds seek to preserve capital by investing in bonds and buying protection against interest-rate volatility. They’re offered in about half of all defined-contribution plans, according to the Stable Value Investment Association. There are about $700 billion in assets in such funds, according to the Washington-based group.
Goldman Sachs fell 15 cents to $162.82 at 1:02 p.m. in New York. The shares have climbed 28 percent this year, outpacing the 17 percent advance for the Dow Jones Industrial Average.
Chief Executive Officer Lloyd C. Blankfein, 59, said this year that he’s devoting a “very high percentage” of his attention to improving performance of the asset-management division, which had outflows each of the past three years.
The purchase from Frankfurt-based Deutsche Bank will add to the $34 billion of stable value assets Goldman Sachs had under supervision at midyear. That accounted for 3.6 percent of the firm’s $955 billion of total assets under supervision, of which $412 billion were invested in fixed income as of June 30.
John Axtell, head of stable value at the Deutsche Bank unit, will join Goldman Sachs along with other members of the management team, according to the statement.
Deutsche Bank canceled talks last year with U.S. money manager Guggenheim Partners LLC to sell a majority of the German bank’s asset-management unit, including DWS mutual funds in the Americas, advisory units for institutional investors and insurance firms, and the RREEF real estate division.
“As we focus on growing the rest of our platform, we have opted not to participate in the consolidation of the stable value sector,” Jerry W. Miller, Deutsche Bank’s head of asset and wealth management in the Americas, said in the statement.