Goldman Sachs Asset Management enters private placement debt business

In order to take advantage of the growing interest in private debt from insurers and pension funds, Goldman Sachs Asset Management has launched a private debt placement activity.

Goldman has a massive insurance operation, managing more than $400 billion in insurance assets for more than 200 clients. The new business line, announced on Tuesday, will focus on providing investment-grade private placement debt for such clients, as well as sovereign wealth funds and repos.

In 2021, the company hired chief executive Jessica Maizel, who most recently worked at New York Life Investments, to grow the business.

“We think it’s such a natural fit for our account base,” said Mike Siegel, global head of insurance asset management and liquidity solutions at Goldman. “It was just a void that we should have filled a long time ago. It took us a long time to find Jessica in the middle of the pandemic.”

Seigel said starting next quarter, Goldman will manage more than $500 billion in insurance assets, which are heavily weighted to higher-quality fixed-income securities. “When you look at the balance sheets of insurance companies, that’s the core of what they invest in,” he said. “We aspire for them to transfer a good portion of it into private assets, especially quality private assets.”

Insurers typically allocate between 5 and 15% of their portfolios to private placement debt, Maizel said, though how they invest varies. “Some clients who are not involved in the asset class at all just want to get in,” Maizel said. “They don’t ask how we buy the offers. They are interested in getting a share of a diversified portfolio and they are happy to enter a new asset class.

Other clients may have more experience but will hire a third-party team to increase diverse deal flow. “There are a handful of stores looking for deals,” Maizel said. “It’s also a relatively competitive market.”

Pensions, on the other hand, approach the asset class differently. “I like talking to pension clients because their risk appetite isn’t as limited as it is for insurance clients,” Maizel said. “We have some important mandates. The only difference is how they approach the market. Rather than holding private placement debt in separately managed accounts as insurers do, these retirement clients hold the assets in pooled funds.

After joining the company, Maizel spent approximately four months working with GSAM’s IT and operations divisions to ensure the systems were in place to support private placement debt investments. She then began contacting some of the firm’s biggest clients to learn more about their investment metrics and deal flow.

A few months later, Goldman acquired NN Investment Partners, a Netherlands-based asset manager that expanded the firm’s reach into the insurance industry, particularly in Europe. “The ability to expand our platform in Europe and beyond at such a rapid pace through the acquisition is extremely valuable to our platform,” Maizel said.

She ended up hiring three women — two vice presidents and an associate-level employee — to work alongside her. The team includes Christine Stehle, former director of MetLife, who will lead the team’s private placement efforts, and Marisol González de Cosío, former managing director of Kroll Bond Rating Agency, who will lead infrastructure and utilities operations. of the team.

According to Maizel, what differentiates Goldman from its established competitors is that the company can leverage its internal relationships with companies looking to borrow long-term capital without entering into a syndicated agreement on the banking side of the company. business. Instead, they may want to access the private market.

“These are the types of deals and relationships on Goldman’s platform that will fuel exclusive deals,” she said. “This is the flow of transactions that many large insurance companies come to us for.”

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