Goldman Said to Consider Aussie Asset Management Unit Sale

  • Equities team is managed by Dion Hershan in Melbourne
  • Sale or management buyout of the unit said to be among options

Goldman Sachs Asset Management is considering exiting its Australian investment business, according to a document detailing the plans.

The fund manager, which oversees about A$9 billion ($6.6 billion) in Australia, is reviewing options including a sale or a management buyout, according to a person familiar with the talks, who asked not to be identified because the discussions are private. The business includes equities and fixed income with a staff of about 40. The Australian equities team is led by Dion Hershan in Melbourne. Hayley Morris, a spokeswoman for Goldman Sachs in Australia, declined to comment.

Goldman Sachs Asset’s Australian equities wholesale fund returned 5.8 percent a year in the five years through the end of March, ranking 151st of more than 450 funds tracked by Morningstar Inc. The Australian Financial Review reported the possible sale of the equities unit earlier.

“In Australia, we believe the next level of growth for the domestic managed product business could be best achieved under new ownership,” Simon Rothery, the firm’s Australia head told staff in an e-mail Wednesday. “This GSAM review is being undertaken independently of the rest of Goldman Sachs in Australia. The firm’s corporate advisory, securities and other activities in Australia will not be affected in any way and will continue to operate as they do today.”

Asset managers around the world who employ people to pick stocks are feeling the pinch from so-called passive investing strategies that aim to provide a lower-cost alternative. Firms such as Vanguard Group Inc. are luring record amounts of cash into passively managed products as investors lose faith in the ability of active managers to beat the market.

“There’s definitely pressure mounting for active management,” Tim Wong, a Sydney-based senior research analyst at Morningstar, said by phone. “We are seeing managers respond by launching different types of strategies that maybe aren’t the standard, long-only large cap funds where there is increasing competition in the form of passive options.”

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