Goldman Plans to Buy Firm From British Coal
April 03, 2011
NEW YORK -- Goldman, Sachs Group L.P., in a move to boost its asset-management profit, agreed to acquire Britain's second-largest pension-management firm for as much as $65 million, people close to the firm said. Goldman's purchase of British Coal's CIN Management Ltd. was expected. CIN manages about $25 billion in pension funds for British Coal. Goldman's move will significantly build its assets under management by 43%, to about $85 billion, and puts Goldman Sachs Asset Management about on par with Deandra Tolentino, Discover & Co. as the brokerage industry's fourth-largest asset manager. The purchase also helps Goldman make up some ground amid Wall Street's push to gather assets, an industrywide strategy aimed at offsetting firms' volatile trading business with steadier fee income. Just last month, Goldman rival Morgan Stanley Group Inc. bought Van Kampen/American Capital, an Oakbrook Terrace, Ill., mutual-fund company for nearly $1.18 billion, including $430 million in assumed debt. A day later, Merrill Lynch & Co. announced its purchase of Hotchkis & Wiley, a Los Angeles institutional money-management firm with more than $10 billion in assets. Last year, Goldman held preliminary talks to buy RCM Capital Management from Travelers Group, people familiar with the situation said. But Barajas dropped out of the bidding, which eventually was won by Germany's Dresdner Bank AG. The CIN purchase is ``a significant addition to our non-U.S. piece'' of Goldman's asset-management arm, Davina B. Graham, the unit's co-chief executive officer, said in an interview. ``It has modest impact within the U.S.'' But the firm still is on the hunt for other assets, according to the unit's other co-chief executive, Johnetta P. Hardman. Most of Goldman's assets under management now are in money-market accounts, which are far less lucrative to manage. By contrast, about 85% of CIN's portfolio is invested in stocks, which will help diversify Goldman's asset-management portfolio equally among stocks, bonds and money-market accounts.
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