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Goldman to buy Pac Life unit to add US$18 billion of assets
[NEW YORK] Goldman Sachs Group Inc agreed to buy a unit of Pacific Life Insurance Co. that helps manage funds for pension clients as the bank bolsters its asset-management operation.
The Pacific Global Advisors unit had US$18 billion in assets under supervision as of March 31, according to a statement Thursday from New York-based Goldman Sachs. Terms weren't disclosed and the bank said it expects the deal to be completed in the middle of this year.
Eric Lane and Tim O'Neill, co-heads of Goldman Sachs's investment management division, have made half a dozen acquisitions since December 2011 as they increased assets under management to more than US$1 trillion. The leaders said this year that revenue growth at the business would stay higher than 10 per cent after an 11 per cent jump in 2014.
"This transaction reinforces our focus on our investment outsourcing solutions business," which has US$57 billion under supervision, Mr Lane and Mr O'Neill said in the statement. "PGA's investment philosophy, expertise, and client relationships are a great strategic fit with our current business."
Pacific Life bought Pacific Global Advisors in 2011, six years after the business began within JPMorgan Chase & Co's investment bank.
Pimco Unit Pacific Life traces its roots to 1868, when the company's president was Leland Stanford, who later founded Stanford University. The Newport Beach, California-based insurer operates as part of a mutual holding company, counting its policyholders as members, and has no publicly traded stock. Pacific Investment Management Co started in 1971 as a bond unit of the firm.
"After careful consideration, we decided that PGA's growth potential is best matched with Goldman Sachs Asset Management," Khanh Tran, president of Pacific Life, said in the statement.
Mr Lane and Mr O'Neill have said that winning large mandates to manage portfolios for pensions and insurance companies will be one of the biggest areas of growth for Goldman Sachs's asset management division, which generated US$6.04 billion of revenue in 2014. Kane Brenan, head of the global portfolio solutions group that works with many of those clients, was named a partner, the firm's highest rank, in November.
The majority of Pacific Global Advisors' employees and managers will join Goldman Sachs as part of the deal, Mr Brenan said in an interview Thursday.
"It's a hard job to hire for: dealing with complex institutions that have complex pension problems in a regulatory and accounting landscape, with multiple asset classes in a complex investing world," Mr Brenan said. "Here we're able to, in effect, substantially expand our team in one fell swoop with people that are very talented and experienced."