SYDNEY (Reuters) - Goldman Sachs Asset Management GS.N is considering the sale of its Australian equities and fixed income businesses, people familiar with the plans said on Wednesday, as it looks to exit one of the country's most intensely competitive markets.
The Wall Street bank is conducting a strategic review of its Australian asset management business but has not made a decision on the sale, the sources told Reuters on Wednesday on condition of anonymity as the discussions were private.
Goldman’s Australian fund management business oversees about A$9 billion ($6.6 billion), making it a relatively small player in Australia’s A$2.6 trillion wealth management industry where scale is often critical. The U.S. firm also operates investment banking and corporate advisory businesses in Australia.
A Goldman Sachs spokeswoman declined to comment.
If it goes ahead with a sale, Goldman will be following in the footsteps of Swiss bank UBS UBSG.S which offloaded its private bank in Australia last year after a review of its underperforming businesses.
It also would not be the first sale of this kind for Goldman Sachs in Asia. Last year, it sold its Indian fund management unit for $37.5 million, following a series of similar exits by foreign players from the crowded market.
But whereas in India it was a total sale, its plans suggest the institutional business in Australia is worth persisting with.
Unlike the banking industry which is dominated by four big lenders, the Australian wealth management industry is alive with competition from new boutique fund managers with relatively low cost bases. The A$1.7 trillion pension industry is also setting up in-house teams to manage funds, in another challenge to big investment banks.
Options being considered by Goldman Asset Management include a sale to a third party or a management buyout, with Australian equities team head Dion Hershan and associates setting up a boutique, the source added. Even after the sale, Goldman would continue to sell global products to its institutional clients, the source added.
In investment banking, Goldman Sachs dropped to 22nd position in the Australian equity capital market underwriting business, from No.1 in the same period a year earlier, according to Thomson Reuters data. In M&A, Goldman has maintained its No. 3 position so far this year.
Additional reporting by Byron Kaye; Writing by Denny Thomas in Hong Kong; Editing by Stephen Coates
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