Goldman lands US$40 billion mandate from Shell for pension assets

Goldman Sachs Group won a US$40 billion mandate from Shell to oversee pension assets for the energy company, in one of the biggest outsourced deals of its kind.

Goldman Sachs Asset Management (GSAM) will oversee the pension money in Europe and assets for a captive insurer, as well as provide advice on North American pension plans, according to a statement on Tuesday (Sep 9) from Goldman.

The mandate, which was up for grabs in a competitive process, includes public and private assets, as well as liability-driven and cash-flow investments that are designed to help pensions meet their obligations. The assets are set to be transitioned over to GSAM this year.

Corporate pensions, nonprofits and foundations have been increasingly tapping big money managers to oversee investments. GSAM and BlackRock are two of the largest firms competing in the outsourced chief investment officer business, alongside Marsh McLennan’s Mercer and Russell Investments.

The shift has led to a spree of big-ticket mandates for the largest asset managers. Last year, Goldman announced a roughly US$43 billion account from United Parcel Service and, in 2023, the asset manager won a deal to oversee a £23 billion (S$40 billion) mandate from BAE Systems. In total, Goldman supervises about US$450 billion in outsourced assets.

“We think that a lot of asset owners are looking to refocus their energy and resources on their core areas of strength and competitive advantage,” Tim Braude, GSAM’s global co-head of multi-asset solutions, said in a phone interview. “And for many of these asset owners that’s candidly not investing.”

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The amount of money GSAM will earn from managing the assets was not disclosed by the firms. Fees for institutional mandates can vary widely depending on size and asset class, typically within a range of 0.2 percentage points to 0.4 percentage points of total assets, Morningstar equity analyst Johann Scholtz said.

“This is a massive mandate which would typically lead to lower margins, he said. “However, the presence of private market assets would likely push the average margin up again.” BLOOMBERG