00:00Why exactly do this deal? It's not the biggest, $400 million or so, but what does this give Goldman?
00:05Yeah, Danny, you're right. I mean, it's less than a quarter of the size of the deal that was announced
00:09last week to buy Neos Investments, which is a big ETF issuer, which is based in Connecticut.
00:15This company, LCN Capital Partners, is essentially known as a triple net lease company, which is basically, it allows Goldman
00:22and these types of investors, it's basically a property investment where you buy the property and you're often buying from
00:30the existing tenant, the existing owner, and then you basically lease it back to them.
00:34So it's a sale lease back opportunity and it's quite a fairly complex structure, but essentially you own the property
00:41and your tenant pays you rent, but they also pay everything else.
00:46They look after the maintenance, they look after the taxes, and essentially you can package this up as an investment
00:50and sell it off to institutional investors, wealthy clients, there are tax advantages, there are inflation protections involved in these
00:56things.
00:56So for Goldman's investors, high net worth individuals in particular, and also the flip side, the clients that they could
01:02be leasing to, these corporate clients like big box retailers, scientific advancement companies, pharma companies, whatever, anyone who needs a
01:11lot of real estate, it works for both ends of Goldman's spectrum on the banking side and on the asset
01:16management and distribution and wealth side.
01:18You mentioned that they had a deal earlier, Neos. Is something changed in the pace of Goldman M&A? Are
01:24they being more acquisitive than they have historically?
01:26Well, they've certainly been nibbling away over the past year or so. There's been definitely a lull in the middle
01:32part of David Solomon's tenure as CEO.
01:34In the early part when he became CEO in 2018, he definitely did a few deals. Some of them didn't
01:38go quite so well. Some of them had to be wound up or sold off, some of them for a
01:42loss, including Green Sky famously as well.
01:46So these are fresh, these are still in the mind of the executives of Goldman Sachs, but now David Solomon
01:51has really sort of reasserted himself at the company.
01:54He's really doubled down on the strategy to grow the $4 trillion asset management arm at the bank and basically
02:02responding to a lot of investor questions and concerns about wanting to get more stable fee income and not just
02:08relying on the cyclical nature of the trading and the investment banking businesses.
02:11So trying to diversify into more stable revenue streams. And that's why these four acquisitions that Goldman has made since
02:17October last year, they've all come in the asset management part of the business.
02:21The big money manager, this private markets arm, this ETF public markets arm as well that they're trying to grow.
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