is bringing a five-star mutual fund into the fold. Today the New York-based investment bank revealed plans to buy up the $153-million Rising Dividend Growth Fund
from Dividend Growth Advisors
], while retaining Ridgeland, South Carolina-based DGA as the fund's sub-advisor. Watch for Goldman to buy again if the deal is right.
Andrea Raphael, a spokeswoman for Goldman, confirmed that the pricing and terms of the deal were not disclosed and that Goldman did not use an investment bank or consultant for the deal.
She noted that Goldman Sachs Asset Management has made a number of acquisitions in recent years, including: Ayco in 2003; Allmerica Investment Trust in 2006; Axa Enterprise Fund in 2007; and India-based Benchmark in March of this year.
, president and CEO of DGA, confirmed that his firm, too, did not use an outside bank or consultant.
"We were approached by Goldman. They had a great value proposition," Shaver told MFWire.com
. "They made us a very fair upfront offer ... and all of the shareholders benefit."
Shaver confided that, once the deal goes through, expenses on the fund's A shares will drop from 165 basis points to 120 bps, while I shares will go from 125 bps to 80 bps.
"The economies of scale are just fantastic for us," Shaver added. "Our people on both sides are very compatible."
Goldman expects shareholders of the fund to vote on the deal in January. If approved, the fund will be reorganized into the brand new Goldman Sachs Rising Dividend Growth Fund
. It offers A, C and I shares, and Goldman plans to add R and IR shares, too.
, managing director at Goldman Sachs Asset Management and president of Goldman Sachs Funds, praised the fund as "a very attractive vehicle" with "very strong track record and a systematic approach to investing."
"There is an increasing demand for income products," McNamara told MFWire.com
. "We're very excited about this."
And McNamara is still on the prowl.
"We're always looking opportunistically for acquisitions," McNamara added. "We have a very broad platform."
As of October 31, $153 million of DGA's $750 million in assets were in the fund, with the rest in separate accounts. As of September 30, Goldman Sachs Asset Management boasted $821 billion. Raphael confirmed that $190 billion of GSAM's assets are in 84 U.S. mutual funds.
Company Press Release
NEW YORK, December 12, 2011 – Goldman Sachs Asset Management (GSAM) announced today that it will acquire the mutual fund management business of Dividend Growth Advisors, LLC (DGA), the investment adviser of Rising Dividend Growth Fund, an overall Five-Star Morningstar rated mutual fund, to broaden its mutual fund platform to include an income-oriented solution for its growing base of investors. It is proposed that the fund be reorganized into Goldman Sachs Rising Dividend Growth Fund, a newly-organized fund in the Goldman Sachs family of mutual funds. GSAM will act as investment adviser. DGA, using the fund’s current portfolio management team, will act as a sub-adviser.
“We continue to see significant client demand for equity income products. While Goldman Sachs Asset Management has a broad and diverse mutual fund platform, this will expand our equity mutual fund offering,” said James McNamara, Managing Director at Goldman Sachs Asset Management and President of Goldman Sachs Funds. “We are delighted to partner with Dividend Growth Advisors to provide investors with a world class equity income solution.”
The Goldman Sachs Rising Dividend Growth Fund will be a growth and income fund managed using the “10/10” strategy developed by DGA. The Fund will invest in companies that have consistently paid dividends at an increasing rate (averaging at least 10% per year) for a minimum of 10 consecutive years. The Rising Dividend Growth Fund currently offers Class A, C and I shares to investors. Following the reorganization of the fund, this offering will be expanded to include IR and R shares as well.
“We are pleased to partner with Goldman Sachs Asset Management to manage the Goldman Sachs Rising Dividend Growth Fund,” said C. Troy Shaver, Jr., President and Chief Executive Officer of Dividend Growth Advisors, LLC. "We look forward to developing synergies between our organizations and expanding the universe of investors we serve."
The reorganization of the fund is subject to a shareholder vote, which is anticipated to occur in the first quarter of 2012. It is expected that proxy materials with respect to the proposed reorganization will be sent to shareholders of the Rising Dividend Growth Fund in January 2012.
Dividend Growth Advisors is a privately held money management company based in South Carolina that serves a broad range of investors who seek a classic, straightforward, transparent, and time-tested approach for the management of their investment portfolios. Established in 2003, DGA had total assets under management of $750 million as of October 31, 2011, of which The Rising Dividend Growth Fund contributed $153 million. The investment team has 136 years of combined experience.
Goldman Sachs Asset Management is the asset management arm of The Goldman Sachs Group, Inc. (NYSE: GS), which manages $821 billion as of September 30, 2011. Goldman Sachs Asset Management has been providing discretionary investment advisory services since 1988 and has investment professionals in all major financial centers around the world. The company offers investment strategies across a broad range of asset classes to institutional and individual clients globally. Founded in 1869, Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
A REGISTRATION STATEMENT RELATING TO GOLDMAN SACHS RISING DIVIDEND GROWTH FUND HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SECURITIES OF THE FUND MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS IS NOT AN OFFER TO SELL SECURITIES OF THE FUND AND IS NOT SOLICITING AN OFFER TO BUY SUCH SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THE REGISTRATION STATEMENT IS NOT COMPLETE AND MAY BE CHANGED.
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