The Goldman Sachs Group, Inc. (NYSE:GS.PK) Barclays Global Financial Services Conference September 12, 2022 10:30 AM ET
Company Participants
Julian Salisbury – Global Co Head of Goldman Sachs Asset Management
Conference Call Participants
Unidentified Company Representative
Hi, we’re at 10:30. So we’re going to continue. Next up, very pleased to have Goldman Sachs from the company, Julian Salisbury, Global Head of Asset Management. He’s also a Member of the Operating of the Management Committee with assets under supervision approaching $3 trillion, Goldman’s top five global active asset manager with and with almost $400 billion in alternative assets, and the top five player in that segment as well. I think people appreciate that. Last year that’s $15 billion in revenue business at about a quarter of Goldman. And while its contributions decline this year, last year you had revenues of over $1 billion, so it’s a meaningful business over time, was quick off with some quick ARS questions as everyone’s trying to find their seats. The first one was we’ve asked for all the companies and just current position in Goldman — to Kerry, that have been one. We’ll write these at the end of the day and see who saw that where maybe go to the next one to help frame the discussion.
Question-and-Answer Session
Operator
[Operator Instructions]
Unidentified Analyst
Do you think that size and scale of the asset manager businesses is properly reflected in Goldman’s valuation? Someone’s kind of copout answer. And we’re going to get into that. But maybe Julian, maybe we could just start kind of big picture macro environment. It’s been challenging growing concerns of recession, obviously market volatility we are all contending with maybe just focus on what are the key risks that you’re focused on for your business, and how has it impacted your outlook for 2022 and beyond.
Julian Salisbury
So notwithstanding the market volatility and somewhat challenging environments you refer to, I would say, the secular trends remain clear. And therefore the medium and long-term outlook for the business remain the same strategy continues, as we laid out at our Investor Day continue to scale and grow. Each of our businesses grow traditional assets, grow alternative assets, where we think there’s a significant opportunity and reduce capital in the business. So let’s say the near-term environment, market environment certainly hasn’t impacted the strategy. If you think about the risks, I kind of break it down into three buckets. There’s asset volatility, and what we’re seeing in terms of performance in the business as liabilities, how we raise money, and what the market environment is doing, to our ability to raise capital and how it’s impacting flows. And then finally, it’s from a capital perspective, the impact it’s having on the disposition or reduction of capital in the business. So on the first, but we have a world class team of investors, they’re built to navigate markets like this. Some of our businesses are doing better in an environment like this having a more challenging period of time.
One of the benefits we have as a diversified business is that in a round, we’re performing well through this environment. Something like a money market business, it had terrific first couple of quarters of the year really outperforming our competitors. And like a quant equity business, so we’ve seen areas of strong performance, other areas where it’s been more challenged, but in the round, we have their own risk managers in both in place. And that’s not something I really lose a lot of sleep about. As it relates to liabilities and the capital raising environment. I mean, really, you just have to look at what’s happened to our close of 2021. And so far this year, 2021 was a record year, raised $130 billion of [Inaudible] during that period of time, which is a record. We set out some old capital raising targets over a five year period that we met within two and a half years. So yes, you hear about some challenges of fixed income in the first half of the year flows will lay through in that asset class overall, that’s not a Goldman Sachs issue. That’s an industry issue. Clearly in the near term with markets, equity markets down that has an impact in the near term in terms of management fees because they’re based off of market value of assets.
The other thing you hear people talk about is the tougher capital raising environment for alt, some of, there certainly some impact of the denominator effect that you see in public funds either public equity books go down and therefore they have a higher percentage of alt that might have otherwise been planned. And that has some cooling of the demand from that one segment capital raising. But interestingly, if you think about how we raise capital, we raise it from institutions, we raise it from third party distribution, and wealth management. And we’ve raised it through insurance companies, these are three. So US Institutional Investors have had that kind of denominator effect. And that’s what we’ve seen some of the cooling, and that’s actually an area for real growth for us. But somewhere, we’re relatively underrepresented compared to some of our peers. Insurance is a real power ally for us, private wealth is the real power ally for us. And those continue to be good sources of funding. So one of the sources of funding is a little cooler. But notwithstanding that we’re having great success in that channel.
And then on the, as it relates to capital, I would say last year was a tremendous year for both dispositions and monetization. Unfortunately, it didn’t appear as capital going down, because things went up in value and things go up in value it consumes more capital. As we continue to sell and monetize those assets, you’ll see that come back down, again, have really no concerns about our capital reduction targets, we’re well on track to achieve that. They were slow in terms of dispositions in Q1. But we have we’ve monetized hundreds of assets, we have a bottoms up plan to dispose of hundreds of assets over the coming quarters. Some of this is just regularly refinancing naturally being taken out of credit positions, much of it is event driven, IPOs strategic transactions. So whilst it’s slowed down in the first quarter or two, from a disposition, I think you’ll start to see an acceleration of those dispositions in the back half of this year and into next year, and real significant, that’ll start to show up more significantly in the numbers by next year.
Unidentified Analyst
Great. And maybe we can kind of delve into kind of Goldman Sachs, can you just remind us of the size and scale the asset management business, I kind of touched on some numbers in the intro. And just kind of what differentiates you from your competitors, and maybe talk about kind of strengths and kind of areas you’re focused on to improve?
Julian Salisbury
Yes. So my numbers were a little different from your numbers, hopefully mine number are right but $2.5 trillion, maybe it’s FX
Unidentified Analyst
I said approaching $3 trillion, approaching $3 trillion —
Julian Salisbury
It was approaching $3 trillion then the FX had some impact. The, so $2.5 trillion of US across the business, $445 billion alternatives. That makes us as you said, the fifth largest active manager globally, and the fifth largest alternative manager, I won’t go into the extensive, complicated history. But part of the reason people don’t really appreciate that, I think is because these businesses were in different places around the firm until a few years ago, starting in 2019, we started bringing together all of the alternatives businesses under one roof, really recognizing the secular opportunity to provide investment opportunities for our clients, provide them advice. But really, in order to do that, we needed to centralize all of the activities in one place rather than having a bunch of individual team selling products.
So I think we did, I don’t think people quite understand or recognize the size and scale and significance of that business. And within that $445 billion of alternatives, we are operating at scale in private equity, across both buyout growth, vintage, GP stakes, we’re operating at scale in private credit, and real estate. And I think each and every category that we would want to be in, we are in, and we see opportunities to continue to scale organically all of those businesses, there’s no gaping hole for us to go and fulfill. And I would say that we’re operating at scale globally, and that business as well 30 year plus experience of investing in alternatives. This isn’t something we’ve just started doing, the merchant bank, where we started our private equity businesses 30 plus years ago, many of these alternative businesses, we may in some cases, we may be raising funds for third party capital for the first time, but we’ve actually been engaged in the investment activity for 20 to 30 years.
Now, in terms of strength, I really believe one of our greatest competitive advantages is that we sit inside Goldman Sachs. I think some people think that could be a challenge of the times. It really is our greatest competitive advantage and it’s a multifaceted one. From a capital raising perspective, the relationships that we have with pensions and balance with private wealth, through our banking relationships, our private wealth relationships through our global markets business just gives us differentiated access to LPs from a capital raising perspective, from a forcing perspective, the ability to tap not only into the investment bank, but other divisions within the firm, whether it’s engineering, global markets, private wealth, these are just really great sources of referrals and deal opportunities. And the one GS, ethos really does operate and exist, witlessly significant opportunities, the full thing, some recent, just in the last year or so we’ve had a number of private wealth clients, or a number of transactions where we have bought a company, and an individual has done very well as a result of that they naturally become not naturally, we ensure we do our best that they become a private wealth client. And then that money cycles back into other funds that we’re raising to invest in other strategies.
Similarly, we may have a business that we’ve invested in with a large cash balance and these transaction banking services. So this virtuous ecosystem, and it’s not just asset management and investment banking, it’s really all the division for the firm is really incredibly powerful. And it’s the other thing that we find is, even if we’re, even if there’s no substantive help, or referral, or touch points, the mere fact that we have the Goldman Sachs brand is just incredibly powerful with entrepreneurs, both in the US and in international markets, they really love the idea of having us as an investor, as a partner, they know that not only will that, create a halo effect will resonate with their partners and clients.
It’ll attract other Capitol Hill certainly gain more news than would have otherwise been the case. So, we still have to be competitive, we still, nobody’s going to give us anything for free. But in a jumbled situation, that the power of the brand is incredibly powerful, both on the origination side or the sourcing side, and on the capital raising side. And I think that will also we’ll talk about perhaps later, but as we start raising more money from the wealth and the retail channel, again, I think the brand works really well.
In terms of things to work on, as I already mentioned, we’ve made great progress in terms of capital raising, but I think, we’ve been in the third party capital raising business for less time and some of our competitors on the outside. And while we’ve made significant investment, I think continuing to invest in that, over the next coming quarters will not only work — it work not necessarily to meet our existing targets, will be necessary to meet our more aspirational targets and substantially grown from where we are today or above and beyond our near term targets. And then integration. As you know, we’ve made a couple of acquisitions. And I think we have to hope to well underway and going well, and continuing to make sure that we get the best out of those acquisitions monetizable value of those –
Unidentified Analyst
Helpful memoir, we put up the next ARS question. Okay, this is the one before this one. Should be the third one. He said that last time you were wrong. Alright, we’ll table that. Maybe we talk about your forward strategy for asset management, talk about your growth plans for alternatives, maybe the key opportunities, growth drivers, and just kind of what gives you kind of conviction and your ability to succeed.
Julian Salisbury
As I mentioned earlier, I mean, our forward strategy is really just a continuation of the strategy we articulated back at the Investor Day, in early 2020. It’s just continuing to build upon and evolve. We laid out at that time three primary targets $250 billion of net traditional flows, $150 billion of gross alternative fundraising, and then a capital reduction target. In February of this year, we updated those targets $350 billion of traditional flows, $225 billion of growth alternative fundraising, we kind of needed to update it having met the five year target after two years. And then we added a couple of additional numbers, the $10 billion management fee of which $2 billion will be alternatives. And in terms of those numbers, it really just bottoms up, we look at all of the funds that we’re planning to raise over the next couple of years. That within alternative space alone, we have north of 40 that were in mark was right now. So you’re not exposed to any one of those but you it’s really, there’s a $10 billion and the $2 billion are really an output of our bottoms up plans around fundraising.
In terms of what gives us confidence, I mean, we just see sometimes the, for example, when you raise the money, it’s a pretty long sales cycle. And even after you’ve got it closed, many of the strategies, you’re typically only starting to charge once the capital gets invested. So there tends to be a lag between when you close the fund and when the fees start rolling in the door. So we have a real sense that the momentum is starting to build through the funds that have already been raised. And we have real confidence that momentum will continue to build. And, the other thing that just gives us confidence in this, as you’ve seen, it may not show up in the numbers yet. It’s just time. But late in 2020, we raised the Strategic Solutions Fund this was, if you divide the old fundraising between two categories, as well, we’ve had existing funds, and with one simply raising the next vintage of that fund. And looking to raise more than we raised in the prior fund. And then in some cases, it’s the first time fund. Trap solutions, first time fund, long-term strategy, but primarily with the firm balance sheet $16 billion of capital from a standing start in six months during COVID. And this unprecedented, one of the largest first time funds ever raised. We charge on invested. So it takes a while for that to ramp up. As we invest the capital, we just closed on private equity, the latest version of our private equity funds substantially larger than the last one that we raised. And we see great momentum in that business. When I have to be careful, I’m not allowed to talk about funds that we are currently in market with but Peters help will be another great example, we’re very active in the GP stakes business, the last fund that we closed earlier, shields substantially bigger than the last one, so it’s just really time as these things ramp up. And we also see the forward look on the various funds that we’re raising. And then in addition to these flagship funds, there’s a multitude of separately managed accounts, single asset deals, and other bespoke arrangements that we have with our clients. So we’re just kind of seeing it in action.
Unidentified Analyst
Got it. And then just talk to you what do you see as kind of some of the biggest secular trends and just how, you’re looking to kind of support clients and capitalize on those?
Julian Salisbury
Yes, I mean, we’ve talked about a lot already, but alt is continues to be at the front of the sort of most conversations that we have with clients working to grow existing exposures where they already have it, diversify it. And in some cases, that’s still being introduced to, I’d say, it’s more prevalent and advanced in some of the US endowments and foundations, but in other parts of the world. Certainly in places like insurance, it’s less evolved right now. So that continues, that is really the kind of one of the big of mega trends and the asset growth that we see in that space, dramatically outstripping the traditional space, hence, the focus on alternatives through many of the traditional competitors. But again, one of the benefits we have here, we have an existing suite of alternative assets. And we just need to really scale them and grow them using our existing teams.
To double click on that, as the retail ultimate democratization of alternatives, we’ve seen a couple of our competitors start to launch these products, whether that’s generally income replacement, so or yield alternatives around private credit or private real estate, that there will also be products coming through that are growth replacements, equity type replacements. So I’d say that, and I think the reason you’ve seen many of alts competitors focusing on that space is they’ve seen the growth, the relative slowing down of growth in the traditional institutional channel, which has been their sweet spot of where they rips lot of our capital. And they’ve been kind of moving to focus more on edge and wealth management, or retail. Now, for us, insurance is already a power ally, we manage $450 billion of insurance money, so we just have to migrate that into alternatives. We’ve had historically, a very strong relationship with the private wealth business and raise a lot of money through that channel. And it’s now developing more of these accredited investor products that you can roll out to connect to a broader set of individuals. I think customization remains a huge trend. I think this is both on the traditional side, as well as on the alternative side, people wanting bespoke solutions. And that could be something like a separately managed account for equities, where you have specific tax requirements or specific investment philosophy that you want to embed in your portfolio, and we have a hugely scaled platform operating in that space. I already mentioned that, on the alternative side with demand from plans to have specific curated solutions, a specific region, specific sub asset class, wanting to do more directed investments. So that demand for customization is there, which creates some challenges, frankly, because it’s a lot easier when you have one large commingled fund. But it’s a requirement. And I think it plays to our strengths, because we’re relatively uniquely positioned to provide solutions to approach a client with a multitude of products, both public and private. So we can manage, if they need, something with public and private credit in it, for example, we can manage that for them, I think with public and private equity we can manage that. We can say, so I think that’s a trend customization.
ESG is still I know, there’s arguments on both sides of the channel for this topic. But it is a real topic of conversation with every client that we have. And that could be in some cases, a specific product. Whether it’s, again, I’m going to have to stop myself, because I can’t mention funds that we’re currently raising, it could be a specific product, or simply embedding the ESG characteristics into a broader portfolio, customizing it and tailoring. And that’s a real topic of conversation. And then the other trend, of course, is just consolidation. I think it’s, I think there’s room in the world for great niche players who are focused on what they do. And they do it very well, in a focused way. But I think you can continue to see power accrue for larger scale, multi asset class platforms who can provide true solutions to their clients, because it’s just what our clients are asking for. And I also think, in order to do that the investment that’s required in technology and distribution that it’ll — it all points to really operating at a larger scale. So I think you’ll continue to see consolidation, if you’ll look at the acquisition we made in Europe, of NNIP and that was a $300 billion Asset Manager, which was really subscale. Especially when your traditional focus, and I think they realized that it was a very natural bolt-on for us. And I think you’ll continue to see more of that.
Unidentified Analyst
And we’re going to come back to that. But what we’re kind of wrapping up here, the business overview strategy section. Something that we’ve tried to do, it’s been hard, but maybe you could help us is just maybe talk to kind of your positioning across strategies and asset classes, and just, take your word for it. How is your performance versus peers? Because some of this isn’t as kind of transparent to us?
Julian Salisbury
Yes. Well, it’s interesting on the traditional side, from a positioning perspective, with top two in fixed income, top three in liquidity, top five in active equities are the performances, some of the performance, at least is out there in terms of mutual funds. And you can see on a three and a five year basis, we’re very competitive. And that’s supported by the flows that we’ve seen, during the course of ‘21, and ‘22, where we, I think you’ll see we significantly outperformed the majority of our peers from it from an active flow perspective.
On the private side, it gets more complicated to summarize and distill performance because people measure and look at it in different ways. Is it NAV accretion over a three or a five year basis? Is it only the outcome of funds? If you’re raising funds every three to five years? Which vintages do you compare it against? Another at a macro level, it’s actually hard to summarize all of that. The best thing I would point you to is what our LPS doing, because they put us through the wringer appropriately on this stuff and really do granular diligence, deal by deal, fund by fund, individual by individual before they give us any money. It’s a truly forensic process that you go through to raise the capital. And if the results weren’t good, we just wouldn’t raise the money. So if you look at the outcomes or the outputs of what’s going on with as fundraisers, I think that will give you the greatest degree of comfort around what the actual performance has been like. And both on the funds, they can talk about that we’ve actually closed, whether it’s strapped solutions, or our private equity fund, or our Peters Health Fund, or some of the other funds that are currently in market right now, I think when you see the outcome of those capital raising events, it will be supportive and demonstrative of strong underlying performance at a, because at the end of the day, what actually matters is the performance sufficient for the LPs who want to invest are attractive enough for the LPs who want to invest, performance. So its outcomes is a great thing to track, helpful.
Unidentified Analyst
Maybe go to the next ARS question. In terms of the targets Goldman’s laid out for its asset manager business by 2024, which one are you most skeptical of? The alternative fundraising is number one, followed by long-term asset flows. Alright, so, a couple questions will kind of delve into your kind of targets. One of them was kind of $10 billion management fee target, $2 billion coming from Ag you’ve talked about. So you kind of gave that that target. Markets have not evolved maybe exactly as anticipated, they never seem to do. Which maybe talk to maybe some of the building blocks towards that the e-target, and just, how sensitive are they to kind of market performance and levels.
Julian Salisbury
Yes. Obviously, that differs a little bit from asset class to asset class, whilst the numbers those targets, you can reasonably assume that we didn’t assume the market just went in one direction like they were, we factored in a variety of different market conditions, that may evolve over the timeframe before setting out those targets. Clearly, the magnitude of the equity market sell off in the first half of this year, would not have been fully factored in. But I also think that’s one asset class, we’ll see how that evolves over the next couple of years markets have certainly been more positive over the last few weeks. There are other areas right now, where fixed income, for example, flows were a little slow in the first part of the year, they’re starting to really come back on money markets businesses, really outperformed in this environment, on the traditional sorry, on the alternative side, is less sensitive to some of the market volatility. And, frankly, in some cases, if the market volatility increases some people’s propensity to want to invest in alternative, when I think about the targets, again, you can just do it bottoms up, we know the funds that we’re interested in market with. There are many of them so we’re not really at risk of any one strategy. It’s such a granular fund by fund build up, that gets us to the number and that’s really why we have confidence in hitting both of those management fee targets. If markets evolve negatively, it could take a little bit longer to get there than would have otherwise been the case, if markets are more positive could get there a little bit sooner. On the traditional assets, but on the alternatives. I think it’s interesting, that last slide that came up it’s hard work, don’t get me wrong, raising alternative capital is a long, grinding, tough sales cycle. But actions speak louder than words. And you can see what we’ve done here today, you saw what we did through the first two quarters of this year. And it won’t always be quite the same cadence and pace. I wouldn’t extrapolate from one quarter necessarily, but over the course of a year. And subsequent years, I think you’ll see us continue to make very good progress and not only meet in time exceed those targets.
Unidentified Analyst
Yes. I think the concern, at least on the $225 billion from a turn base, which you kind of increased from 150 earlier this year. It just feels like fundraising in their current space is getting more crowded. The environment is more difficult to fundraise. Maybe just talk to kind of what you’re seeing in terms of fundraising activity softness or slowdown.
Julian Salisbury
Again, I’ll break it down institutions endowment, wealth, and insurance, open those three broad channels and then US, Europe, Asia. So on a nine box grid or three box grid or nine squares, you would say that US institution is slower. But the insurance demand from clients continues to be very robust. The wealth demand from clients continues to be very robust. On the institutional side. There are certain sovereign wealth funds and other clients in Middle East, Far East Asia that still have significant amounts of allocations to make. So you’ll — you may read and see a lot that isolated purely in on US Institutional Investor base dealing with a denominator effect. But that’s just one off the many funding channels and as I mentioned earlier, actually, for us, we are less exposed to that. We want to grow in that space. We are growing in that space, we’ve added significant clients in that space as part of the strategy that we laid out at Investor Day, was to grow in that space. But it’s actually not as big of funding source for us today as some of our competitors. So I think that’s why it’s not something that is going to really give me, cause me to [lit lot of flippers] in terms of hitting that target.
Unidentified Analyst
Got it. I guess earlier in the conversation you talked about, has, it’s difficult to kind of reduce the capital in the business, given, the appreciation. But clearly, at Investor Day, there’s a lot of talk about capital optimization and reducing on balance sheet investments. Just maybe you talk to your ability to kind of harvest in this environment, you mentioned at plans, but the environment more challenging, less IPOs, less M&A. At the same time, I think you talked about reducing it, by $4 billion by 2024, kind of the opposite direction, do you still think you get there? Or when can you get there, so to speak.
Julian Salisbury
We will absolutely get there, we will meet that target in the timeframe.
Unidentified Analyst
Okay.
Julian Salisbury
And the reason I’m so confident in that is the reason it looks like it has gone up capital appreciation, I’m sorry, we made money last year, capital appreciation was a bit of a headwind. Some of the way that capital gets allocated with stress loss becoming meant that we actually just, we got we had more capital attached to the business than would otherwise be the case. But that will come out as we sell assets, some of our assets became more capital dense. But that means as we sell them, it goes out faster than would otherwise have been the case. It’s my new shy, but we have certain real estate assets that actually as we sell them in the first instance, that actually is not capital, it actually can increase capital. But when you ultimately sell them, capital goes away. So there’s been some headwinds in there. That may not be obvious, but we have a bottoms up plan, asset by asset to meet those capital reduction targets, and I’m very confident that we will meet those targets.
Unidentified Analyst
Okay, clear. Maybe shift gears in terms of each quarter, we’re going to get the earning statement, the income statement, we kind of look at, equity investments, debt investments. And now with this some volatility, the private portfolio is fairly resilient, we’ve obviously seen volatility, and the kind of the public aspect within the equity book. So maybe just talk to maybe the drivers in the resilience and to take a marks in this portfolio. And, to the extent that, the macro environment remains challenging or kind of what we’re seeing in the public markets is, the private market portfolio to catch up to the public market portfolio.
Julian Salisbury
Yes. So it’s a few things when we look at our portfolio, the balance sheet portfolio, I would say the construction was pretty good, coming into COVID. And then the subsequent periods of volatility. So, we, within real estate, we were long multifamily, and logistics and data centers, not hotels, and not retail, within the credit and the equity portfolios. We tended to be more exposed to resilient, recurring revenue type businesses, software healthcare, so that the kind of industry and portfolio selection was, has been good and strong. And that has served us very well. And as it relates to marking the books, sometimes I get this, why isn’t it down? Well, we didn’t mark it up all the way last year when those market conditions are so high. So in the same way it didn’t go up, it won’t go down one for one. Mark evaluation are obviously an input to our valuation process, but they are one of the inputs. So, we look at fundamental valuations, we look at events, we look at structure and liquidation preferences. So, we tend to be more conservative on the way we mark these things often. And subsequently, when you see these downdrafts will less expose the other way, because we’re not using peak market comps as the only input, we’ll look at cross sector multiples, and what we think is a reasonable exit multiple for the position.
The other thing on the real estate equity portfolio, that not everybody appreciates, a lot of these assets are actually consolidated investment entities, that we buy an asset. And we don’t, we’re not able to mark it up to fair value as a decrease in value, we’re only able to depreciate it to actually build in reserves all the time, so when we come to sell these assets, that it’s almost always the case that they’re releasing revenues at the point of sale. So you’re naturally carrying that real estate portfolio at cost less depreciation expense over the life of the investment, and when you sell it, therefore typically realizes the gain, so that’s why there’s perhaps less volatility than people think. I’d love to, it would make managing the risk a lot easier if it just moved one to one with the public equity markets, there are days when the equity markets are up and our book is down and vice versa.
The other thing I would say is, last year, there were a lot of gains from growth equity investments, achieving spectacular valuations, many of which we got, we were able to monetize. The number of public positions is quite modest right now, and will continue to come down. Sometimes there’s a delay, because we have a private company goes public, it takes a little while to get out of the position due to lock ups and what have you. But that monetization is happening rapidly.
Unidentified Analyst
Great. And we’ve got to the last ARS question. See, this was the one sort of the earlier why don’t we skip this one or go to the next one? Or no? Do you think Goldman should do another bolt-on acquisition to augment its asset management strategy? And why the audience is responding, Julian, well maybe shift gears, you mentioned NNIP earlier, and you also had the NextGen acquisition.
Julian Salisbury
NextGen capital acquisition.
Unidentified Analyst
But maybe just talk to, what do they do for you, and just how they fit into the strategy.
Julian Salisbury
So as it relates to NNIP, we continually look and evaluate situations, when we became aware of this asset, it seemed to check a number of boxes for us, one, it gave us an opportunity to double the size of a European business where we were operating a relatively small scale. And we’ve seen the benefits of that already. Because we’re now, we will never really — we weren’t really viewed as a European player. We were a US player, dollar shop selling product into Europe. And we see it in our client conversations now, we’re now viewed as more of a European player to have credibility there. We have over 1,000 people in our European business. It’s, so it’s really moved the needle for us and changed the nature of the conversations we’re having with our clients. Second, because they were a European business, and because of their heritage, they were very focused on ESG. So they had a number of specific products and solutions, and really a philosophy around investing. That’s been very valuable to us in terms of how we’re engaging with our clients, for example, their green bond funds. And then finally, I already mentioned this, insurance is really a power ally for us with the largest manager of nonaffiliated insurance assets globally. We don’t own one anymore, we just manage assets, other insurance companies. We do a good enough job of that so they keep giving us more to manage. We think we’re relatively part of the reason I think NN group selected us as the buyer of their asset management business for those are less familiar and then European insurance companies the old ING business, they’d sold off a US business to become Boyer. They were left as Europe only insurance and Asset Manager. And they were looking for a partner that could take on the asset management business, manage their book, their general account for them, and also help with the transition to bring in more alternatives and the combination of our public markets, insurance business, with our alternatives, capability mender we are pretty uniquely positioned to be able to do that. So I think, scaling Europe, introducing ESG capabilities and products, and then scaling our insurance business. So that’s really what it did for us.
From an ex capital perspective. Whilst we’ve had a long history of working with defined benefit pensions, we really had a more modest scale defined contribution business. And next, really gives us the opportunity to provide customized, bespoke, managed to count defined contribution plans working through employers. And I think we’ll be able to leverage our corporate relationships in other parts of the firm that are already having dialogues with human resource teams with treasures that these corporates to get in and better ourselves, provide insurance solutions for them. So that’s what they both do for us. I do think sitting here today, we’re in a relatively lucky position that we’re already a scale player in all the major asset classes, whether it’s liquidity, fixed income, equities, both quantum fundamental, and across the alternative spectrum, there really isn’t a gap. So we can just scale and grow our existing businesses. There’s no burning need to have to do something because some of the managers may be facing. That being said, of course, we would look at things but the bar will be relatively high given the relatively strong position that we’re in today.
Unidentified Company Representative
Perfect. With that, please join me and thanking Julian for his time today. Next up in this room Northern Trust.
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