Goldman Sachs buys Dutch money manager NN Investment Partners for $1.9 bn

Goldman Sachs Group Inc. agreed to buy the asset-management arm of Dutch insurer NN Group NV as the bank grabs a toehold in the fast-growing sustainable-investing industry and boosts its European ties. 
 

The US lender will pay about 1.6 billion euros ($1.9 billion) for NN Investment Partners, according to a statement Thursday. The unit has around $355 billion of assets under supervision, with about three-quarters of its investments backed by environmental, social and governance criteria.

NN’s sustainability effort “mirrors our own level of ambition to put responsible investing and stewardship at the heart of our business,” Goldman Sachs Chief Executive Officer David Solomon said in the statement. “This acquisition allows us to accelerate our growth strategy and broaden our asset-management platform.”

Asset management is experiencing a wave of consolidation across the globe as scale becomes ever more important in an industry facing growing margin pressures. Most players are increasingly seeking more exposure to growth markets such as 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 of assets and hundreds of staff from London into offices across the European Union including in Paris, Frankfurt, Milan and Madrid, though its London operations still dwarf those on the continent.

Early Interest
 

The acquisition is further proof that the financial industry can no longer afford to treat ESG as an afterthought. The market for products claiming to support social justice and a greener planet is already estimated at $35 trillion globally, and is likely to exceed $50 trillion by 2025, according to Bloomberg Intelligence.

Still, a lot of what’s sold under an ESG tag 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 increase 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 dedicated units that aren’t able to compete on fees with the largest international fund houses. The biggest European asset manager, France’s Amundi SA, bought Societe Generale SA’s Lyxor unit in April to expand in exchange-traded products. In June, Pimco parent Allianz said it wanted to play an active role in the consolidation of the industry.

Dutch Boost
 

Goldman said in its statement that the transaction will see the Netherlands become a “significant location in our European business.” That’s another boost to Amsterdam’s financial center, which became the key hub for share trading in the region after the U.K. left the EU at the start of the year.

Under the agreement, NN Group and Goldman Sachs Asset Management will enter into a 10-year partnership whereby 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 from NN’s management board with immediate effect and continue to lead NN Investment Partners.

“Following the closing of this transaction, NN Group expects to have excess 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 complete by the first quarter of next year.

--With assistance from Tasneem Hanfi Brögger and Jeff Black.