Goldman Sachs to buy NextCapital

Goldman Sachs has agreed to acquire Chicago-based NextCapital Group, an enterprise digital advice company. No financial terms were disclosed. The deal is expected to close in the second half of 2022. ​

PRESS RELEASE

NEW YORK – March 29, 2022 – The Goldman Sachs Group, Inc. (“Goldman Sachs”) today announced that Goldman Sachs Asset Management has entered into an agreement to acquire NextCapital Group (“NextCapital”). The transaction is expected to close in the second half of 2022, subject to regulatory and other approvals and conditions.

The transaction will accelerate the expansion of Goldman Sachs’ services to the growing defined contribution market through personalized managed accounts and digital advice. NextCapital, based in Chicago, is an open-architecture digital retirement advice provider that partners with financial institutions across the United States to deliver personalized, customizable retirement planning and managed accounts through workplace retirement plans and individual retirement accounts (IRAs). Its flexible, open-architecture platform enables clients, including asset managers, plan sponsors, advisors and recordkeepers, to meet individual investor demand for more digitalization, retirement income solutions, tailored strategies and insights. Together, the companies anticipate providing services to large retirement plans while working with platform clients in an open architecture approach.

Goldman Sachs Asset Management has a long history of working with employers to help them deliver high quality retirement programs for their employees, with total defined benefit (DB) and defined contribution (DC) assets under supervision of approximately $350 billion. The acquisition of NextCapital will augment existing capabilities throughout Goldman Sachs’ asset and wealth management businesses, providing another tool for sponsors and other clients to consider when constructing a retirement program. Goldman Sachs also partners with Chief Human Resources Officers (CHROs) and other wellness programs through its leading workplace wealth offering, Goldman Sachs Ayco Personal Financial Management. NextCapital’s managed account platform currently powers the Goldman Sachs Workplace Retirement Solution, a retirement program for small and mid-sized businesses.

David Solomon, Chairman and CEO of Goldman Sachs, said “This acquisition furthers our strategic objective of building compelling client solutions in asset management and accelerating our investment in technology to serve the growing defined contribution market.”

“Employers are looking to provide their employees tailored solutions and customizable advice that can better support individual saving and investing needs to help improve retirement savings outcomes. We believe personalization represents the future of retirement savings and will drive the next wave of innovative retirement solutions,” said Luke Sarsfield, Co-Head of Goldman Sachs Asset Management. “Together with NextCapital’s talented team, we will continue to invest in technology to improve the experiences and outcomes of retirement investors and better serve the employers, advisors and financial institutions that support the growing $10 trillion DC market and the even larger IRA segment.”

John Patterson, CEO at NextCapital said, “Our vision for the future of the retirement savings market is aligned with the team at Goldman Sachs: technology that can create a differentiated experience combined with a strong culture and focus on clients forms a powerful offering for our clients and the individuals they serve. We can leverage the resources of a global financial services firm to continue to scale our platform and offer it to new third party institutional clients and Goldman Sachs’ broader wealth management organization.”

Upon closing of the transaction, NextCapital’s platform is expected to become part of the Multi-Asset Solutions (MAS) business of Goldman Sachs Asset Management, which has offered custom multi-asset portfolios from Goldman Sachs and third party asset managers for over 20 years. Led by Greg Calnon, the group has approximately $220 billion in assets under supervision today, ranking it the largest Outsourced Chief Investment Officer (OCIO) provider in the U.S. and second largest globally by outsourced assets under management. Investing in the delivery of solutions for the growing DC market is a core focus of MAS and is supported by the broader capabilities and technology of the firm.

The NextCapital team will continue to be headquartered in Chicago.
Goldman Sachs & Co. LLC is serving as financial advisor and Weil, Gotshal & Manges LLP is serving as legal counsel to Goldman Sachs. PJT Partners is serving as exclusive financial advisor and Morgan, Lewis & Bockius LLP and Orrick, Herrington & Sutcliffe LLP are serving as legal counsel to NextCapital.

About NextCapital Group
NextCapital is an enterprise digital advice company headquartered in Chicago. With a passion for innovation and decades of industry experience, the NextCapital team has brought disruptive financial solutions to market in an effort to help everyone retire successfully. The company partners with leading financial institutions to deliver configurable solutions tailored to the needs of investors and goals of partners. The company works with partners to personalize planning and managed accounts, customize methodology and fiduciary roles, and in some instances serve as the 3(38) investment manager for discretionary, plan participant advice. Their clients include asset managers and plan sponsors across the United States as well as partnerships with recordkeepers.