Goldman (GS) to Buy NextCapital in Asset Management Push

The Goldman Sachs Group, Inc. GS announced that its asset management segment entered an agreement to acquire robo-advisor NextCapital Group.

NextCapital currently has about $220 billion in assets under supervision. The company is a digital retirement advice provider that partners with financial institutions across the United States to deliver tailormade, customizable retirement planning and managed accounts through workplace retirement plans and individual retirement accounts.

Hence, the transaction will expand Goldman’s services to the growing defined contribution market through personalized managed accounts and digital advice. Moreover, the buyout will enable GS to leverage the increasing preference for customized solutions for individuals like personalization and target-date funds based on different retirement timelines.

With the collaboration, the companies anticipate providing services to large retirement plans and work with platform clients in an open architecture approach. The move also augments existing capabilities in Goldman’s asset and wealth management businesses by providing another tool for sponsors and other clients to choose from when constructing a retirement program.

Upon the deal closing, NextCapital’s platform is expected to be integrated with Goldman Sachs Asset Management segment’s Multi-Asset Solutions business. The transaction is anticipated to close in the second half of 2022, subject to regulatory and other approvals and conditions.

Goldman’s management noted, “This acquisition furthers our strategic objective of building compelling client solutions in asset management and accelerating our investment in technology to serve the growing defined contribution market.”

Of late, Goldman has been making efforts to diversify its business mix toward more recurring revenues and durable earnings. In August 2021, the company’s asset management business entered an agreement to acquire Dutch asset manager NN Investment Partners from NN Group N.V. in a €1.6-billion (or $1.9 billion) all-cash transaction. This will improve Goldman’s international presence, and European retail distribution and insurance asset management capabilities.

Further, in an effort to augment its retail lending footprint, Goldman recently closed the deal to acquire GreenSky, Inc. Such inorganic growth efforts will diversify the fee-revenue base and offer top-line stability.

Last month, the company targeted organic traditional long-term net inflows in the Asset Management segment to reach $350 million by 2024, up $100 billion from the previous target. Also, it projects more than $10 billion in firmwide management and other fees by 2024.

Over the past year, shares of this Zacks Rank #4 (Sell) company have gained 2.3% compared with the industry’s rise of 7.2%.

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Other Companies Making Inorganic Moves

JPMorgan JPM inked a deal to acquire Ireland-based fintech firm Global Shares. The deal value hasn’t been disclosed yet. The transaction, still subject to regulatory approvals, is expected to be wrapped up in the second half of 2022.

Following the closure of the deal, Global Shares will be integrated into JPMorgan’s Asset & Wealth Management segment. The firm will continue to be based out of its current location.

To further boost its fixed-income trading operations, Raymond James RJF inked a deal to acquire SumRidge Partners, LLC. The financial details of the transaction, which are subject to certain regulatory and other closing conditions, were not disclosed.

SumRidge is a technology-based “fixed income market maker” specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional-preferred securities. Its integration with Raymond James’ Fixed Income Capital Markets will complement the “core client-facing business” and add sophisticated trading technologies and risk management tools.

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