Goldman Sachs/NN: recurring income inspires steady relationship

Goldman Sachs/NN: recurring income inspires steady relationship

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Some Wall Street companies yearn to swap the hurly-burly of investment banking for the deep, deep peace of asset management — or at least experience more of the latter. Goldman Sachs announced on Thursday its largest acquisition yet under boss David Solomon, taking on NN Investment Partners for €1.6bn ($1.9bn). No racy alternatives specialist, NNIP specialises in fixed income, mostly for its Dutch insurance parent NN Group.

The deal gives Goldman Sachs Asset Management a European beachhead, as media was quick to point out. Recurring income probably matters as much.

The purchase adds $355bn to GSAM’s assets, lifting the total to $2.6tn. That will hardly deflect the stylus for Solomon, whose sideline as a DJ this column, like every other, is professionally obliged to mention whenever possible.

NNIP only earned about €65m ($76.5m) in the first half of this year after taxes. Compare that with GSAM’s $4.8bn. NNIP generated an average of just 16 basis points from its clients, partly because three-quarters of its funds specialise in fixed income, usually lower rent.

Scale is what NNIP lacked. But what does Goldman get in return? The Dutch fund manager