Pitch Best Deal 2021: Goldman Sachs – NN Investment Partners
Bekijk alle pitches & stem direct
De beste deal van het jaar is meer dan het hoogste cijfertje in de krant en de kunst van het dealmaken is meer dan het opstellen van een contract. De Awards voor de beste deal zou dus niet alleen op de prijs van de deal gebaseerd moeten zijn, maar vooral op de – toegevoegde – waarde voor een bedrijf en de exit.
Name of the deal: Goldman Sachs acquires NN Investment Partners
Date announced: 19-08-2021
Date closed: The transaction is expected to close by the end of the first quarter of 2022, subject to regulatory and other approvals and conditions.
Published value: 1.6 billion (€)
Buyer(s): Goldman Sachs Asset Management, which forms part of The Goldman Sachs Group
Target: NN Investment Partners
Seller: NN Group N.V.
Involved firms and advisors buy side:
Freshfields Bruckhaus Deringer (Legal Advisory Corporate/M&A), Sullivan & Cromwell (Legal Advisory Corporate/M&A), Deloitte (Tax Advisory), CFF Communications (PR Consultancy)
Involved firms and advisors target side:
n/a
Involved firms and advisors sell side:
JP Morgan (M&A Advisory) De Brauw Blackstone Westbroek (Legal Advisory Corporate/M&A and Tax Advisory) PwC (Financial Due Diligence)
Pitch
Brief description deal / Deal outline
The proposed acquisition of NN Investment Partners by Goldman Sachs (through its asset management business, Goldman Sachs Asset Management) from NN Group. NN Investment Partners is a leading European asset manager based in The Hague, with approximately $355 billion in assets under supervision and approximately $70 billion in assets under advice. NN Investment Partners offers a broad range of equity and fixed income products, with a strong Environmental, Social and Governance (ESG) integration across its business. As part of the transaction, Goldman Sachs Asset Management will also enter into a long-term strategic partnership agreement with the NN Group to manage an approximately $190 billion portfolio of assets of NN Group.
Why should this deal win the Award for Best Deal 2021?
This deal has all the hallmarks of a truly great M&A transaction, including the transaction value (more than EUR1.5 billion) and the parties involved. In addition, it was an exceptionally complicated transaction from a business, operational, financial and legal point of view. The target company is a highly regulated business that operates in various jurisdictions in Europe, Asia and the Americas. Other elements that further complicated the transaction included the following:
- the deal was run as a competitive auction process, putting significant pressure on timelines.
- the deal consisted not only of a sale of a business, but also includes a long-term and ongoing/forward-looking relationship between Goldman Sachs Asset Management and the NN Group in the form of an ongoing partnership / asset management agreement between NN Group and Goldman Sachs Asset Management.
- the transaction involves a carve-out of the NNIP business from the rest of the NN Group with all of the complexities that go with that, including additional arrangements to document certain transitional arrangements between seller and target group.
This all lead to an intense sales process which included coordination across various time-zones and numerous jurisdictions and an often-delicate process to match the expectations of a US purchaser (used to US deal terms, which are commonly more purchaser-friendly) with the expectations of the locally-based seller (with Dutch deal terms generally being more seller-friendly than what US parties are used to).
As a result of the transaction and the long-term strategic partnership arrangement that is part of the transaction, Goldman Sachs Asset Management will become the largest non-affiliated insurance asset manager globally, with the Netherlands now for the first time being a significant location in this business going forward. The transaction therefore firmly establishes the Netherlands as a European and even global hub for asset management, with there being an expectation that this business might grow even furtherin the future, and additional acquisitions might also be part of that growth strategy if the right opportunities arise.
The short- and longer-term impacts of the transaction on the relevant parties to the transaction and their stakeholders and for society as a whole as further described in this submission (particularly in so far as the increased focus on responsible investing and ESG considerations and available options for customers/investors are concerned) further substantiate our view of why this deal should be selected as the deal of the year.
Deal rationale:
NN Group’s perspective:
NNIP makes a relatively small contribution to NN Group’s bottom line, generating about 8% of the total operating profit in the first half of this year. The transaction is also expected to have a positive impact on the NN Group’s solvency ratio and capital position, which are also important to NN Group as a result of certain regulatory requirements that apply to it.
As a result, the divestment and subsequent cooperation with Goldman Sachs will allow NN Group to focus on other core business areas while strengthening its capital position and still continuing its successful cooperation with NNIP and to benefit from strength sand complementary product propositions of Goldman Sachs.
GS’ perspective:
The acquisition allows Goldman Sachs to accelerate its growth strategy and to broaden its asset management platform. The deal is part of the strategy to make the bank’s revenue stream less reliant on earnings from trading on global markets and advising on deals. Also, Goldman Sachs wants to expand its presence in regions outside the United States, and in particular in Europe.
Furthermore, asset management is experiencing a wave of consolidation across the globe as scale becomes ever more important in an industry facing growing margin pressures. The need to have a varied, multi-asset portfolio is becoming increasingly important as investors look for diversification. This deal will, amongst other things, broaden the custom propositions that are on offer to customers, in particular in relation to ESG.
What is the impact of this deal on the company?
The combination with Goldman Sachs Asset Management gives NNIP a broader platform to accelerate its growth and further improve the offering and service to its clients.
What is the impact of this deal on the direct stakeholders?
This transaction brings together two international asset managers, each with many decades of investment experience.
Following the closing of the transaction, NN Group could have excess capital which might be available for additional returns to shareholders over time unless used for value-creating opportunities such as acquisitions. It will also allow NN Group to continue its successful cooperation with NNIP and to benefit from the strengths and complementary product propositions of Goldman Sachs as a future partner.
NNIP is highly complementary to Goldman Sachs Asset Management’s existing European footprint and will strengthen its fund management and distribution platform. The long-term strategic partnership arrangement will establish the firm as the largest non-affiliated insurance asset manager globally, with over $550 billion in assets under supervision, and the acquisition will provide a foundation for further growth in the firm’s European fiduciary management business, building on the success of its platform in the United States and United Kingdom. The transaction also gives Goldman Sachs Asset Management a position in the fast-growing sustainable-investing industry.
What is the impact of this deal on society?
The combination of the complementary investment capabilities of NNIP and Goldman Sachs Asset Management will create a full suite of asset management products that can be offered to clients through the distribution networks of both parties. This deal will broaden the custom propositions that are offered to customers and would support the delivery of long-term value to the clients and shareholders of Goldman Sachs Asset Management.
NNIP is a top-ranked ESG manager in Europe and 75% of its assets under supervision are ESG integrated. Goldman Sachs shares the commitment for responsible investing and NNIP will add new capabilities and accelerate growth in products such a sustainable and impact equity, and green bonds. NNIP’s leading position in responsible investing will therefore strengthen Goldman Sachs Asset Management’s sustainable investment strategy, product offerings and client solutions.
What was most complex about this deal?
The deal was concluded following a competitive sale process. The key challenge was the multi-jurisdictional and highly regulated nature of the target business. As a result, a large number of local counsels were involved in the background, which had to be coordinated on an ongoing basis, across various time-zones and often on short notice given the pace at which the transaction developed. Also, given the difference in usual M&A market practice in Europe when compared to the US, there were a number of discussions with the US-based purchaser to get familiar with some of the European-style terms of the transaction and to ensure that its bid remained competitive.
