(Reuters) -Goldman Sachs will invest as much as $1 billion in T. Rowe Price Group and will also partner with the asset manager to offer private market products to retail investors, the companies said on Thursday.
Shares of T. Rowe rose about 10% in premarket trading following the announcement.
Big financial firms such as Goldman, BlackRock and Morgan Stanley are making a big push into alternative assets, an area dominated by private equity firms, to capitalize on their growth potential and attract
new clients.
Goldman will invest through a series of open-market purchases with the intention of owning about 3.5% of T. Rowe, the companies said, potentially making the Wall Street bank the firm's fifth-largest shareholder.
The partnership will also give Goldman access to T. Rowe's retirement-focused client base, which is seen as a stable income stream.
The firms plan to focus more on offering retirement products such as target date funds, which automatically adjust an investment portfolio's asset allocation from high-risk assets such as stocks to more lower-risk assets such as bonds as a specific target date approaches.
T. Rowe manages about $1.70 trillion in client assets, two-thirds of which are related to retirement.
"We think Goldman brings a broad range of private markets and wealth management capabilities to this relationship that will allow the two companies to design a very broad range of solutions that can address client appetite as it evolves," Evercore ISI analysts wrote in a note.
The investment will provide a much-needed boost to T. Rowe, which has been facing asset outflows amid shifts in the competitive landscape of the asset management industry. Its stock has lost half its value since 2021.
Goldman will use its balance sheet to hold equity in T. Rowe, Bloomberg News earlier reported.
(Reporting by Pritam Biswas in Bengaluru; Editing by Anil D'Silva)
