TA Associates seals Goldman Australia MBO deal

TA Associates, which recently bought Seattle-based asset management business Russell Investments from the London Stock Exchange Group, is looking to capitalise on Australia's A$2trn pension market.

Boston-headquartered private equity firm TA Associates has reached a management buyout agreement with Goldman Sachs Asset Management’s (GSAM) Australian equities fund management business, the firm said in a statement.

Financial details of the transaction were not disclosed.

TA Associates, which has raised $24 billion since 1968, is looking to capitalise on Australia’s A$2 trillion ($1.5 trillion; €1.3 trillion) pension market, one of the fastest growing globally with a 10-year 9.1 percent growth rate, according to Willis Towers Watson.

“The Australian fund management industry is a large and growing market,” Michael Berk, managing director at TA Associates said in a statement.

“In addition, increased regulatory and compliance costs have created barriers to entry and have highlighted the benefit and need for scale among asset management firms.”

GSAM is the asset management unit of the Goldman Sachs Group, which manages over $1 trillion of assets as of June 2016. The Goldman Australia unit which was sold to TA Associates manages A$8 billion in funds for institutions and retail investors. It specialises in multi-asset and hybrid strategies.

TA Associates said it is teaming up with Goldman Australia’s senior leadership team for the new entity. Head of equities Dion Hershan will lead the new business as managing director, Katie Hudson will co-lead the Australian Equities team, focusing on the small and mid-cap universe, and Roy Keenan will be fixed income portfolio manager.

Following the transaction, which is expected to close by year-end, the new entity will be rebranded. A spokesperson for Goldman had no further information about the rebranding.

Goldman’s Sheila Patel, chief executive of International Goldman Sachs Asset Management, said that the firm will “retain its global institutional sales and distribution capabilities for core global products” and will continue its presence in Australia.

TA Associates has made 18 investments in the asset management industry. In June, the firm acquired Seattle-based Russell Investments from London Stock Exchange Group for $1.15 billion. The firm has also made investments in Toronto-based Altamira Investment Services, Stockholm-based Söderberg & Partners, and Omaha-based NorthStar Financial Services.

It is currently investing TA Fund XII, its $5.3 billion 2015-vintage venture capital and growth equity vehicle focused on healthcare, consumer, technology, and financial services deals, according to PEI data. The firm typically invests $50 million to $500 million equity per deal.