SENNA

Goldman Sachs to Acquire ETF Issuer Innovator for $2 Billion

Goldman Sachs has agreed to acquire Innovator Capital Management, a leading issuer of exchange-traded funds (ETFs), in a deal valued at $2 billion, according to people familiar with the matter.

The acquisition underscores Wall Street's growing appetite for the fast-growing ETF market. Innovator has amassed over $25 billion in assets under management, offering a suite of defined-outcome ETFs that aim to provide investors with downside protection. The transaction is expected to close in the second quarter of 2023, the sources said.

For Goldman, the deal represents a strategic push into the retail wealth management space. "This acquisition aligns with our efforts to expand our asset management franchise and provide more holistic solutions for individual investors," said David Solomon, Goldman's chief executive officer.

Innovator's founder and CEO, Bruce Bond, will continue to lead the business within Goldman's asset management division. "Joining forces with Goldman gives us the resources and platform to accelerate our growth and deliver even more innovative products to investors," Bond said in a statement.

The ETF industry has seen explosive growth in recent years, with assets ballooning to over $7 trillion globally. Investors have flocked to the low-cost, tax-efficient funds as an alternative to traditional mutual funds. Major Wall Street firms have been rushing to expand their ETF offerings to capture a slice of this lucrative market.

In 2019, BlackRock acquired Aperio Group, a pioneer in customized index investing, for $1.05 billion. Last year, Morgan Stanley snapped up Eaton Vance, the Boston-based asset manager known for its advanced beta and ESG ETFs, in a $7 billion deal.

Analysts say the Innovator acquisition positions Goldman to better compete with industry titans like BlackRock and Vanguard. "This gives Goldman a strong foothold in the fast-growing defined-outcome ETF space, which is appealing to more risk-averse investors," said Senna, a senior market analyst at a leading financial research firm.

The transaction is subject to customary regulatory approvals. Goldman expects the deal to be immediately accretive to its earnings.