NN Investment Partners remains committed to serving its fiduciary clients in the best possible way, while continuing to do so with a local office and with people who know the local market as well as the laws and regulations. Satish Bapat, NN IP’s CEO, explained this in response to questions about the impact of the Goldman Sachs’ takeover on its customers, such as pension funds.
Speaking to Fondsnieuws, Investment Officer Luxembourg’s Dutch-language sister publication, Bapat confirmed that fiduciary clients want to know if after the acquisition of NN IP by Goldman Sachs, the combined identity will be one in which the local presence will continue and in which the service and solutions and strategies offered will remain at the same level. Bapat, who assumed leadership of the asset management arm in 2017, answers a resounding “yes” to that question.
Deepening services
“Fiduciary management is people work, which means that after the merger of the two asset managers as a starting point, we will continue to serve the market with the same people and services. Whether in a few years’ time we will do that from The Hague (where NN IP’s office is now, ed.) or in Amsterdam (where the asset management arm of Goldman Sachs is based, ed.), I don’t want to speculate, but there is no doubt that we will continue our presence in the Netherlands and that we will deepen and broaden our service.”
In August, it was announced that NN Group is selling its asset management business to Goldman Sachs for approximately €1.7 billion, and that the insurance group will also continue to use the combined asset manager (Goldman Sachs Asset Management and NN IP) for a variety of asset management services for at least another ten years.
Earlier, Fondsnieuws spoke with NN Group and Goldman Sachs Asset Management. Last week, Fondsnieuws had an exclusive conversation with NN IP’s CEO Bapat. However, Bapat could not say anything about some of the topics as yet, as the pan of the integration between both asset managers is still on the fire.
Cultural differences
The market is saying that the cultural differences between NN IP and Goldman Sachs are likely to be the main challenge for a successful merger. Bapat, who has lived and worked in five countries, acknowledges the importance of this. But at the same time, he also plays down those differences. “I think the most important thing is the mindset. Where are we complementary? Where can we learn from Goldman Sachs and where can they learn from us? What I have seen so far is that we are connected in our shared understanding of the importance of customers and employees. We are both intensely focused on good, consistent and very high quality service.”
Bapat stresses that since they started the talks with Goldman Sachs this summer, he and the rest of the board have come away with the impression that the US firm, like NN IP, is focused on building consensus before a decision is made. If you look at the history of Goldman, you see that the company is originally a partnership and that it is therefore used to bringing people together.
Board did good job
When Bapat was appointed by NN Group as the new top executive of NN IP in 2017, and a completely new team built around him, a strategy was fomented that focused on how to better serve its customers, including being able to provide performance to those customers “across the cycle”. This was done by focusing on fundamental research, on a strong combination of people and machines to improve performance, by making more use of “behavioural analysis” and by pursuing a strict policy of ESG integration.
The CEO of NN IP thinks the board did a “good job”, which helped make the sale of the company to Goldman Sachs possible. Bapat characterised the picture of this merger as “ambique”, but when asked, he said he means the two-sidedness of it. For example, NN IP is very strong in the field of equities, bonds and multi-assets. In addition to these specific European-focused qualities, Goldman Sachs Asset Management brings in many complementary strategies and products, which are mainly aimed at the US and UK markets.
“On top of this, NN IP offers a lot of knowledge and experience in the field of ESG integration and SRI. By combining this knowledge and expertise, we believe we can grow in Europe, but also in Asia, where the position of Goldman Sachs Asset Management is relatively weaker than in the US,” said Bapat.
Focus on longer-term growth
Bapat said that when NN Group announced a strategic review of its asset management business in April last year, he was involved in the process. Some €300 billion was being managed for clients, with growth of €13 billion by 2020. This is estimated to include more than 40 mandates from institutional clients, including pension funds. The managed fiduciary assets of these parties amount to about EUR 60 billion. Against this backdrop, NN IP was looked at from a “position of strength” and discussed how to create a broader platform, for example, by partnering with another market player, to ensure longer-term growth. Bapat said he believes that this ambitious goal can be met by partnering with GSAM and continuing the strategic alliance with the insurance group.