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Goldman Wins $2B Assignment from NY Pension Fund

Zacks Equity Research

Marking its biggest deal, The Goldman Sachs Group, Inc. (GS) partnered with the New York State Common Retirement Fund ('CRF') – one of the largest public pension funds in the U.S. – to manage $2 billion of the latter’s $180.7 billion stock portfolio. Financial terms and conditions have not been disclosed.

The deal follows the Wall Street giant’s discussions with the pension fund for the past one and a half years. The CRF holds assets in trust for over one million employees and retirees from state governments, local governments and a number of public authorities.

Per the agreement, Goldman’s unit – Goldman Sachs Asset Management ('GSAM') – will select managers to invest $2 billion of the pension fund’s portfolio in the global equity space. Also, GSAM will act as an advisor for the overall equity portfolio.

According to Timothy J. O’Neill and Eric S. Lane, global co-heads of the investment management unit of Goldman, “The Strategic Partnership with CRF is a landmark assignment for GSAM and we appreciate the confidence CRF has placed in us.”

Goldman has entered into similar ventures in the past. In 2008, the company’s investment management wing penned a $1.5 billion partnership with South Carolina Retirement Systems while in 2010 it inked a $500 million partnership with Alaska Permanent Fund.

On a separate development, per a Bloomberg report, GSAM has become a lead investor in a deal to acquire stakes in two older distressed-debt funds (2002 and 2005). The funds are run by Crescent Capital Group LP – a former unit of Carlyle Group LP’s TCW Group Inc. The deal value is estimated to be around $350 million, including net asset value and new investment capital.

Our Take

Amid soft trading volumes and a stringent regulatory landscape, growth in Goldman’s investment management business should ease some pressure on revenues. We believe Goldman is set to benefit from the broader trends in the industry as well. Currently, the investment management industry has a Zacks Industry Rank of 43 out of more than 260 industries, suggesting that it is well positioned, especially when compared to other segments.

Goldman carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the investment management space include Moelis & Company (MC), Arlington Asset Investment Corp. (AI) and Piper Jaffray Companies (PJC). All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on GS
Read the Full Research Report on MC
Read the Full Research Report on PJC
Read the Full Research Report on AI


Zacks Investment Research