Stockholm (NordSIP) – The wave of consolidation across the asset management sector continues as firms seek to scale up operations. It came hardly as a surprise when, in August 2021, Goldman Sachs announced its intentions to acquire Dutch-based asset manager NN Investment Partners. Earlier that year, NN Group had indicated that it was reviewing the strategic options for the group’s asset management arm. Meanwhile, Goldman Sachs was on the lookout for ways to expand its European presence. No doubt, NN IP’s strong sustainability credentials also played a critical role in the process.
“When NN Group decided to sell NN IP, we identified the business as being extremely complementary to our own, with limited overlap in product offering,” explains Fadi Abuali, CEO of Goldman Sachs Asset Management International. “We also recognized NN IP’s strength in ESG integration and sustainability and believed that combining it with our offering would be of great benefit to clients, helping us to scale and accelerate growth in Europe,” he adds.
A new giant is born
On 11 April, the acquisition was completed, creating a powerhouse with over USD 2.8 trillion in combined assets under supervision (as of 31 December 2021). The transaction roughly doubles the size of Goldman Sachs’ business in Europe, adding new capabilities and accelerating growth in products such as European equity and investment-grade credit, sustainable and impact equity, and green bonds. Meanwhile, Goldman Sachs’ leading alternative solutions offering further strengthens NN IP’s position and provides a full suite of products for its clients.
“Our combination creates a strong platform to provide an expanded offering and dedicated service to clients globally, bringing together the best of both organizations to deliver a broader set of complementary investment capabilities and solutions across all asset classes,” says Abuali. “We are excited that the Netherlands will become one of the most important locations for Goldman Sachs in Europe and to welcome the extremely talented team at NN IP.”
Building on sustainability excellence
According to Abuali, Goldman Sachs remains committed to placing sustainable investing at the heart of its business and intends to leverage NN IP’s expertise and its existing centre of excellence for sustainability to complement the firm’s current investment processes and deepen ESG integration across strategies.
“We aim to advance sustainability efforts through investing strategies and solutions that seek positive and measurable impact,” comments Abuali. “Our clients are increasingly seeking ways to enhance the ESG alignment of their investments and have a positive impact while generating robust financial returns. We believe the acquisition will strengthen this position and advance our ambition,” he says.
Sustainable investing and stewardship are already a core part of Goldman Sachs’s investing activities, according to Abuali. He quotes as an example the way the asset manager recently extended its stewardship voting policies to encourage greater diversity on company boards. Late last year, Goldman Sachs announced that the firm expects companies in the S&P 500 and FTSE 100 to have at least one diverse director from an underrepresented ethnic minority group on their board. The policies were also expanded to expect public companies globally to have at least two women on the board unless the board has fewer than ten members or where local requirements are already higher than this minimum.
“We use proxy voting to help influence behaviour at companies in which we invest on behalf of clients. Our proxy voting policies reinforce our commitment to make diversity a core part of our standard for investing client assets,” comments Abuali. “For us, diversity is about performance and unlocking value for our investors. We believe diverse companies perform better and that encouraging diverse perspectives to be heard in the boardroom, and at management level leads to better commercial outcomes,” he adds.
Diversity is also a priority within Goldman Sachs’s own business. “We set aspirational goals for hiring and senior representation, in addition to tasking managers across the firm with prioritizing diversity and promoting an inclusive workplace,” explains Abuali.
A test of compatibility
There will undoubtedly be plenty of challenges in the coming months as Goldman Sachs looks to integrate NN IP’s business and its more than 900 employees. Abuali chooses, however, to focus on the many similarities between the two new partners and seems confident that the process will be successful.
“We believe the culture of both firms aligns well and are eager for the many opportunities for both sets of employees to learn from each other and grow together over time. Both organizations put client service at the centre of their businesses, strive for excellence in everything they do and see sustainability as a priority,” concludes Abuali.