Boston-based private equity firm TA Associates said it agreed to back a management buyout of Goldman Sachs Asset Management’s (GSAM) Australian focused investment capabilities and fund platform.
The transaction is expected to close by year-end, subject to certain approvals. Financial terms were not disclosed. The new company will be rebranded accordingly.
GSAM is the asset management arm of Goldman Sachs Group Inc. (NYSE: GS), which supervises over $1 trillion in assets as of June 30, 2016. GSAM Australia, which has more than A$8 billion (roughly $6 billion) in assets under management, started reviewing options including a sale or a management buyout in May, as reported by ExitHub.
Since the appointment of Dion Hershan as GSAM’s head of Australia Equities in 2007 and the subsequent build out of the investment team, GSAM Australia has successfully grown to be a leading Australian equities and fixed income fund manager. The firm’s core offering is its fundamental Australian equities product set, consisting primarily of long only concentrated strategies. The firm’s fixed income capabilities include multi-asset and hybrid strategies. The firm serves the Australian institutional and retail markets, and it also distributes Australian investment products overseas, including in Japan.
TA Associates is partnering with the new company’s senior management team consisting of Dion Hershan who will be managing director of the new standalone entity and will continue to lead the Australian Equities investment team, focusing on large cap equities; Katie Hudson who will co-lead the Australian Equities team, focusing on the small and mid-cap universe; and Roy Keenan who will be fixed income portfolio manager.
“We are very pleased to back the management buyout of this exciting business,” said Edward Sippel, a managing director at TA Associates and co-head of Asia who will join the new company’s board of directors.
“We are confident that we have found the right partner in TA Associates,” said Hershan.
“TA Associates has offered a compelling opportunity to further grow the Australian focused investment capability and platform for our Australian equities and fixed income clients,” said Sheila Patel, CEO of International Goldman Sachs Asset Management.
GSAM will retain its Australian institutional sales and distribution capabilities for its core global products.
According to Willis Towers Watson, as of 2015, the Australian pension market was the fifth largest in the world with total assets of approximately A$2 trillion. It is one of the fastest growing pension markets, with a 10 year growth rate of 9.1%, owing in part to the government’s policy of compulsory superannuation contributions.
“The Australian fund management industry is a large and growing market,” said Michael Berk, a managing director at TA Associates who also will join the new company’s board of directors.
TA Associates, with offices in Boston, Menlo Park, London, Mumbai and Hong Kong, is one of the largest and most experienced global growth private equity firms. The firm has invested in more than 460 companies around the world and has raised $24 billion in capital.
TA Associates has been a leading investor in the asset management industry for more than 25 years, having made 18 investments in the sector to date, most recently the June 2016 acquisition of Russell Investments from London Stock Exchange Group and the April 2015 acquisition of NorthStar Financial Services Group.
In Australia, TA most recently completed an investment in Nintex Group, a global provider of workflow software solutions, and a management buyout of SpeedCast Ltd (ASX:SDA), a global satellite communications service provider. Since TA’s investment, SpeedCast and TA have teamed up to make six additional acquisitions in Australia and, in 2014, SpeedCast completed an IPO on the Australian Stock Exchange.
The move comes after last year’s Swiss bank UBS Group AG’s (NYSE: UBS) decision to withdraw from its Australian wealth-management services after a strategic review.
In May 2015, the UBS unit’s former head Mike Chisholm agreed to acquire UBS Wealth Management Australia Ltd with its license and A$14bn in assets under management, through a spin-off and management buyout, together with the unit’s former team.
Chisholm’s new firm Crestone Wealth Management Ltd. was launched with a team of 170 staffers including 70 advisers, after the buyout was completed in June this year.
Photo: Dion Hershan, Head of GSAM Australia Equities.