In its latest effort to grow its defined contribution retirement business, Goldman Sachs Asset Management announced Wednesday that it will acquire Deutsche Asset & Wealth Management’s stable value business, valued at $21.6 billion of total assets under supervision as of June 30.
The transaction, which is expected to close during the first quarter of 2014, follows last year’s acquisition of Dwight Asset Management, a stable value asset manager based in Burlington, VT. Stable value funds are capital preservation investment options in U.S. retirement savings plans that invest in a high-quality, diversified fixed income portfolio protected against interest rate volatility by wrap contracts from banks and insurance companies.
John Axtell, DeAWM’s head of stable value, and other members of the DeAWM stable value management team will join GSAM under the terms of the transaction. Prior to the closing, DeAWM “will work with clients to ensure a seamless transition to GSAM or other stable value managers,” according to a GSAM release. GSAM reports that it managed more than $55 billion in defined contribution mandates, including more than $34 billion in stable value assets under supervision, as of June 30.
“GSAM’s acquisition of DeAWM’s stable value business affirms our strong commitment to providing defined contribution plan participants with capital preservation investment options,” said Eric S. Lane and Timothy J. O’Neill, co-heads of the Investment Management Division at Goldman Sachs, in a statement. “The expert talent and potential client relationships that we gain from this transaction will complement our existing stable value business.”
The transaction follows GSAM’s July 2013 announcement of its intent to establish a new stable value collective trust.
Jerry Miller, head of DeAWM Americas, said the firm is shedding the DC portion of its business as it focuses on the fixed income, equity and alternative asset classes. “As we focus on growing the rest of our platform, we have opted not to participate in the consolidation of the stable value sector,” Miller said in a statement. “Consequently, we are pleased with the sale of our stable value business to one of the leaders in the space.”
Goldman Sachs Asset Management is a unit of The Goldman Sachs Group Inc. (GS), which oversaw $955 billion in assets under supervision as of June 30. With $1.2 trillion billion of assets under management as of June 30, Deutsche Asset & Wealth Management is a leading investment organization worldwide.
Read Don’t Diss Bond Funds: Goldman Sachs at ThinkAdvisor.