Goldman Sachs is shutting down the London operations of its internal hedge fund, closing a chapter in a unit that ranked as one of the biggest launches to date.
Goldman Sachs Investment Partners started in 2008 with total assets of $7bn, including $2bn of Goldman’s own money. But performance was patchy and a few years ago the bank began pulling money out of the fund to comply with the Dodd-Frank Act of 2010, part of which requires big banks to limit their investments in hedge and private equity funds.
About eight London-based employees were recently told to move to Goldman’s global headquarters in Manhattan, or find a new job internally.
A person familiar with the reshuffle, which was first reported by Reuters, said it was triggered by the retirement of Nick Advani, a managing director who led the hedge fund from London and said last June he would be stepping down from his role.
Another managing director, Raluca Ragab, who had been leading the London-based team after Mr Advani stepped down, will leave Goldman once the move is complete.
Goldman said the reshuffle was not connected to the UK’s efforts to negotiate an exit from the EU, which has prompted many financial services groups to review their staffing in the country.
“This is a discrete decision for reasons specific to GSIP, one investment team within Goldman Sachs, and shouldn’t be construed as anything but that,” said Goldman.
GSIP, which Goldman describes as a multidisciplinary fund seeking “asymmetric risk-reward opportunities to achieve equity-like returns”, sits within the bank’s investment management division. That division has become an increasingly important contributor to the group’s bottom line, as earnings from trading and investment banking have been hit by swings in asset prices and erratic client activity.
But it, too, has seen the top line shrink. Net revenues from the division were down 7 per cent last year at $5.79bn, thanks in large part to a drop in incentive fees. That fall was milder than an 11 per cent drop in revenues from investment banking ($6.27bn) and a 25 per cent slide in revenues from the investing and lending segment.
Last year total assets under supervision at Goldman increased by $127bn to $1.38tn, putting it in a similar league to Pimco ($1.49tn) and JPMorgan ($1.77tn).
GSIP is run by Raanan Agus and Kenneth Eberts, both co-heads based in New York. Mr Agus was the bank’s former global proprietary trading chief and Mr Eberts ran prop trading in the US. The fund now manages about $3.5bn.
Last month Goldman said it had yet to make any decisions on staffing in the UK, after the Brexit vote in June.
“It is obviously going to be a long process,” said Harvey Schwartz, chief financial officer, while presenting fourth-quarter earnings. “We’re kind of contingency planners by our very nature, so we’ll run through different alternatives …We’re going to see how this evolves over the next couple of years.”
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