Goldman Sachs Acquires Verus Investors' Strategic Partnership Unit

Goldman Sachs Asset Management has agreed to acquire Verus Investors’ strategic partnership business, which includes $21 billon in assets. Financial terms of the deal were not disclosed.

The unit will become a part of Goldman Sachs Asset Managements’ outsourcing solutions business, which provides asset allocation, portfolio construction, and risk management. Goldman Sachs Asset Management is the asset management arm of investment bank Goldman Sachs.

The acquisition “adds to the overall depth of our investment team, and Verus brings some additional risk analysis that would be beneficial to our client base,” said Greg Calnon, managing director of Goldman Sachs Asset Management’ Global Portfolio Solutions.

“We’ve looked at other possible acquisitions to determine if it would be additive or redundant, and we think this acquisition is additive.”

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Jeffrey Scott, Verus Investors’ chief investment officer, will move over to Goldman Sachs Asset Management. Joining Scott are deputy chief investment officer Omer Tareen, managing director Scott Day, and supporting portfolio management staff and analysts.

Verus will retain its core business lines, including the outsourced chief investment officer (OCIO) business, traditional consulting, risk management, and private markets consulting.

“Outsourcing is a trend that we see growing in pension funds, endowments, foundations, and healthcare orgbed a tremendous amount of our capacity and required a great deal of operational support that wasn’t central to our core business,” said Verus CEO Jeffrey MacLean. “By seeking a large financial services firm such as Goldman Sachs, we are able to ensure the clients under this umbrella would be given the opportunity to have their expanding needs met for many years to come and allow Verus to focus on our core competencies.”

By Michael Katz

Mission-related investing (MRI) is gaining strong momentum among non-profit institutional investors, with 31% making investments aligned with environment and climate change, healthcare, housing, job creation, and education, according to a survey by Cambridge Associates, a global investment firm. None of the investors surveyed expect to decrease their allocations.

It’s no secret that public demand has been high for colleges and universities to divest from fossil-fuel related investments, and the survey found climate risk a top consideration for 41% of colleges and universities and 30% of foundations.

Most of their investment strategies involve negative screens, but investors anticipate proactively seeking ESG and environment/climate change opportunities in the future. Respondents said their biggest challenges are lack of adequate mission-related investment options and their own resource constraints.

“The good news for mission-related investors is that we’re seeing a proliferation of ESG and impact investing strategies coming to market, so this product supply problem is becoming less of a barrier to entry over time,” Jessica Matthews, managing director at Cambridge Associates and head of the firm’s Mission-Related Investing Practice, said. The firm tracks 1,000 MRI funds.

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The survey, fielded in 2016, included 159 non-profit institutional investors of foundations, colleges and universities, religious institutions and pensions from the United States, Italy, Japan, New Zealand, Switzerland and the UK.

Of the respondents, 44% have increased their mission-related allocations recently and 62% expect to grow it within five years.

It’s still early for investors to have solid performance data to review, but in 2015, Cambridge worked with the Global Impact Investing Network to study the financial performance outcomes for private equity and venture capital funds with an impact lens. “That first report, issued in the summer of 2015, did demonstrate that in many cases, impact investing funds had performed in line with comparable benchmarks that we pulled from our own database,” Matthews told CIO.

When it comes to measuring social impact from investments, firms have different approaches. “Our view is that there is no one-size-fits-all; we’re not going to come up with a score,” said Matthews, who considers measuring impact part of due diligence. It’s “understanding the impact the manager intends to have,” she said.