NEW YORK, Aug 28 (Reuters) – Goldman Sachs (GS.N) on Monday said it has struck a deal to sell part of its wealth business to an independent wealth manager, part of a strategy refresh that is seeing the bank exit some businesses and focus its wealth offering on targeting the super-rich.
The Wall Street bank, which did not disclose the sale price, said the sale to Creative Planning LLC is expected to close in the fourth quarter and result in a gain.
The latest sale is part of a shift in strategy after CEO David Solomon reorganized the firm into three units last year and scaled back ambitions for its consumer business, which lost $3 billion in the last three years.
Goldman bought the registered investment adviser (RIA), formerly known as United Capital Financial Partners, for $750 million in 2019 when it managed about $25 billion in funds.
Creative Planning has more than 2,100 employees across its affiliates and $245 billion in combined assets under management and advisory.
The RIA business was relatively small in size compared with Goldman’s core business which focuses on the super-rich.
Goldman’s private wealth arm oversees $1 trillion in assets for ultra-high net-worth clients, who have $60 million or more in investable assets.
High net-worth individuals – who would fall within the business Goldman is considering selling – typically have about $1 million to $10 million to invest
Marc Nachmann, Goldman Sachs global head of Asset & Wealth Management, told Reuters the current strategy is to invest more in its core businesses such as ultra-high net worth and workplace growth strategy including the proceeds from the sale.
“We think there’s a lot of space for us to grow. So we feel really good about it,” Nachmann said, adding these plans are without a potential acquisition.
The bank can serve high net-worth investors through RIA and other wealth management clients, such as Creative Planning, Goldman said.
Earlier in July, Creative Planning announced it had entered into a strategic custody relationship with Goldman’s advisor solutions platform, which serves independent advisors.
Shares of Goldman Sachs were up 1.8% in afternoon trade.
“This transaction is consistent with Goldman’s ongoing efforts to streamline core segments and de-emphasize legacy consumer-centric businesses,” said Daniel Fannon, banking analyst at Jefferies, in a note.
“Within wealth, GS can now focus exclusively on growth of the workplace and premier UHNW (ultra-high net worth) advice channels, while also supporting private banking and lending revenues.”
Goldman Sachs & Co LLC is serving as financial advisor and Weil, Gotshal & Manages LLP is serving as legal counsel to Goldman Sachs.
Goldman is also pushing ahead with a sale of its fintech business, GreenSky, and has also offloaded the bulk of its unsecured consumer loans after it halted this kind of lending last year.