Goldman Sachs Pays $2 Billion For ETF Firm Innovator

Goldman Sachs is set to acquire defined outcome ETF firm Innovator Capital Management.

The $2 billion deal, announced Monday (Dec. 1), is designed to expand the exchange traded fund (ETF) lineup at Goldman’s asset management business.

Innovator, the banking giant noted in its announcement, was managing $28 billion in assets across 159 defined outcome ETFs as of Sept. 30.

“Active ETFs are dynamic, transformative, and have been one of the fastest-growing segments in today’s public investment landscape,” said David Solomon, Goldman CEO and chairman.

“By acquiring Innovator, Goldman Sachs will expand access to modern, world-class investment products for investor portfolios. Innovator’s reputation for innovation and leadership in defined outcome solutions complements our mission to enhance the client experience with sophisticated strategies that seek to deliver targeted, defined outcomes for investors.”

Bruce Bond, Innovator’s chief executive, called the deal a pivotal milestone for his company.

“Goldman Sachs has a long history of discerning emerging trends and important directional shifts within the asset management industry,” Bond said. “We are excited to deliver world-class investment solutions to clients within the ETF framework and expand our business in this high-growth, sector-leading category. These synergies, among numerous others, make Goldman Sachs an ideal partner for us.”

Goldman added that there are $1.6 trillion in global active ETF assets under management, with defined outcome ETFs a critical part of the fast-growing ETF market.

“Defined outcome ETFs utilize derivatives and options-based strategies that seek to offer specific objectives such as principal downside protection, yield enhancement, and defined outcomes if invested for the full outcome period, allowing investors to build and customize portfolios through the tax-efficient ETF wrapper,” Goldman said.

The deal came weeks after Goldman announced it was acquiring Industry Ventures, a venture capital platform that manages $7 billion.

“Industry Ventures pioneered venture secondary investing and early-stage hybrid funds, areas that are rapidly expanding as companies stay private longer and investors seek new forms of liquidity,” Solomon said at the time.

“Industry Ventures’ trusted relationships and venture capital expertise complement our existing investing franchises and expand opportunities for clients to access the fastest growing companies and sectors in the world.”

The bank said Industry Ventures has “pioneered” sections of the venture capital (VC) market, such as offering secondary liquidity solutions, seeding emerging VC funds and “investing at the intersection of venture capital and tech buyout.”