Goldman Sachs Asset Management (GSAM) announced Wednesday it has plans to acquire Deutsche Asset & Wealth Management’s (DeAWM) stable value business, which handles assets of around $21.6 billion. As per the terms of the deal, key executives of the Deutsche team, including John Axtell (DeAWM Head of Stable Value) will join Goldman Sachs.
The deal is expected to be completed by the first quarter of 2014. Before the deal is concluded, DeAWM will ensure a proper transition of clients to Goldman Sachs Group Inc (NYSE:GS) or other stable value managers.
Deal in line with Goldman Sachs objective
The deal marks the latest efforts by GSAM to boost its defined contribution business. Last year, for the same purpose, the company acquired Dwight Asset Management, which is a stable value asset manager in Burlington, Vt. In July of this year, the investment bank revealed plans to create a fresh stable value collective trust.
GSAM currently handles more than $55 billion in defined contribution mandates, which includes more than $34 billion in stable value assets under supervision. Goldman Sachs asset management arm handles $955 billion in assets while Deutsche Asset & Wealth Management oversees $1.2 trillion of assets under management.
Stable value funds are a kind of investment option available in U.S. retirement savings plans. According to the company, such funds are used for premium investments like diversified fixed income portfolio, which guards the funds against the interest rate volatility.
Win-Win deal for both
Eric S. Lane and Timothy J. O’Neill, co-heads of the Investment Management Division at Goldman Sachs, said “GSAM’s acquisition of DeAWM’s stable value business affirms our strong commitment to providing defined contribution plan participants with capital preservation investment options.” They further said that the “expert talent” and “potential client relationships” that Goldman will be acquiring through the deal will be a perfect fit for its stable value business.
Head of Deutsche Asset & Wealth Management’s Americas, Jerry W. Miller told that they have been investing heavily in the Americas business to ensure a wide range of investment options to clients, in the form of fixed income, equity and alternative asset classes. He further said that the management opted for the sale of stable value sector to focus on developing the other platforms.
“Consequently, we are pleased with the sale of our stable value business to one of the leaders in the space.” Jerry W. Miller said.