In an effort to take advantage of a growing interest in private debt on the part of insurers and pension funds, Goldman Sachs Asset Management has launched a private placement debt business.
Goldman has a massive insurance operation, managing over $400 billion in insurance assets for more than 200 clients. The new business line, announced Tuesday, will focus on providing investment-grade private placement debt for these clients, as well as for sovereign wealth funds and pensions.
In 2021, the firm hired managing director Jessica Maizel, who most recently worked at New York Life Investments, to build the business.
“We think this is such a natural fit for our account base,” said Mike Siegel, Goldman’s global head of insurance asset management and liquidity solutions. “It was just a gap we should have filled a long time ago. It took us some time to find Jessica in the middle of the pandemic.”
Seigel said that as of next quarter, Goldman will be managing more than $500 billion in insurance assets, which are heavily weighted toward investment-grade fixed income. “When you look at insurance companies’ balance sheets, that’s the heart of what they invest in,” he said. “We have aspirations to have them shift a fair proportion of that into private assets, specifically investment-grade private assets.”
Insurers typically allocate between five and 15 percent of their portfolios to private placement debt, Maizel said, although how they invest varies. “Some clients who aren’t involved in the asset class at all just want to get in,” Maizel said. “They don’t ask about how we source deals. They’re interested in getting a slice of a diversified portfolio, and they’re happy with stepping into a new asset class.”
Other clients may have more experience but will hire a third-party team to increase diversified deal flow. “There’s a handful of shops who source deals,” Maizel said. “That’s a relatively competitive market as well.”
Pensions, meanwhile, approach the asset class differently. “I love talking to pension clients because their risk appetite isn’t as constrained as it is for insurance clients,” Maizel said. “We have a couple of sizable mandates. The only difference is how they approach the market.” Rather than holding private placement debt in separately managed accounts like insurers do, these pension clients hold the assets in commingled funds.
After joining the firm, Maizel spent about four months working with GSAM’s IT and operations divisions to make sure systems were in place to support private placement debt investments. Then she began reaching out to some of the firm’s largest clients to learn about their investment parameters and deal flow.
A few months later, Goldman acquired NN Investment Partners, a Netherlands-based asset manager that expanded the firm’s reach in the insurance business, particularly in Europe. “The ability to expand our platform into Europe and beyond at such a rapid pace due to the acquisition is extremely valuable to our platform,” Maizel said.
She ended up hiring three women — two vice presidents and an associate-level staffer — to work alongside her. The team includes Christine Stehle, previously a director at MetLife, who will lead the team’s corporate private placement efforts, and Marisol González de Cosío, previously a managing director at Kroll Bond Rating Agency, who will head up the team’s infrastructure and utilities operations.
According to Maizel, what differentiates Goldman from its established competitors is that the firm can leverage its internal relationships with companies that are looking to borrow long-term capital without doing a syndicated deal on the banking side of the business. Instead, they may want to access the private market.
“Those are the types of deals and relationships from Goldman’s platform that will be feeding proprietary transactions,” she said. “That’s the deal flow that a lot of the large insurance companies are coming to us for.”
