Goldman Sachs announced it will invest up to $1 billion in T. Rowe Price Group. The Wall Street bank will also partner with the asset manager to deliver private market products to retail investors, both firms confirmed on Thursday.
Shares of T. Rowe surged nearly 10% in premarket trading and remained up about 6% by mid-morning after the news.
Major financial institutions like Goldman, BlackRock, and Morgan Stanley are expanding into alternative assets, an area once dominated by private equity firms. These products are gaining attention as investors look for growth opportunities beyond traditional markets.
The partnership provides Goldman with access to T. Rowe’s massive retirement client base, a key source of steady income. Michael Ashley Schulman, CIO at Running Point Capital Advisors, explained: “Goldman did not buy a friend, it bought a fast lane into 401(k) distribution, since two-thirds of T. Rowe’s assets come from retirement accounts.”
Goldman will build its stake in T. Rowe through open-market purchases. The goal is to own about 3.5% of the company, which could make Goldman one of T. Rowe’s top five shareholders.
Both companies plan to expand their retirement offerings, especially target date funds. These funds shift portfolios automatically from higher-risk assets like stocks to safer investments such as bonds as the target date approaches.
Analysts at Evercore ISI noted that Goldman’s expertise in private markets and wealth management could help design a wider range of investment solutions for T. Rowe’s clients.
This move also offers relief for T. Rowe, which has seen significant asset outflows in recent years. Its stock has lost about half its value since 2021. According to Bloomberg News, Goldman will use its balance sheet to hold equity in T. Rowe.
