Goldman Sachs Group Inc. will pay as much as $2.25 billion to buy Neos Investments, expanding its asset manager’s reach in the actively managed exchange-traded fund market.
The cash-and-equity deal will add a fast-growing ETF issuer to the Wall Street giant’s roster of offerings, according to Marc Nachmann, who oversees Goldman’s money-management arm. The relatively new upstart is behind nearly two dozen options-based income ETFs commanding some $32 billion in assets, according to data compiled by Bloomberg.
Such funds became popular with a variety of investors in recent years thanks to their high-yielding payouts. The Neos platform packages and makes available complex, institutional-level strategies for a broader segment.
“Neos has been on a tremendous growth trajectory,” Nachmann said in an interview. “Active ETFs are a fast growing space in the asset-management business.”
Goldman has been pushing further into the ETF universe in recent months, striking a deal late last year to buy Innovator Capital Management for $2 billion. With the Innovator purchase, the bank’s asset manager gained a firm known for its defined-outcome ETFs, while the bank is expanding its options-based ETF offerings with the Neos agreement.
The latest acquisition will push Goldman’s ETF assets to about $130 billion.
Since its founding in 2022, Westport, Connecticut-based Neos has attracted inflows with some of its flagship options-based funds providing lucrative double-digit returns that pay out monthly income to investors. It has also touted its ability to utilize favorable tax treatment for its offerings to boost after-tax returns.
Troy Cates and Garrett Paolella, Neos co-founders, will become partners at Goldman Sachs Asset Management after the deal is completed. The full Neos team is expected to join the business as well.
Goldman’s asset- and wealth-management unit, led by Nachmann, had more than $4 trillion of assets under supervision at the end of the second quarter. That was up more than $700 billion from a year earlier. Revenue in the unit increased 20%.
Top executives have said in recent months Goldman remains open to further acquisitions, particularly to complement its push into private markets in the battle against larger players such as Blackstone Inc. and KKR & Co.