Selling PE assets to individual users! Wall Street's "alliances and collaborations" kick off a new round of wealth competition

Traditional asset management giants and private equity firms are accelerating their integration, vying for the emerging market of individual investors.

Goldman Sachs announced on Thursday that it has reached a strategic investment agreement with U.S. asset management company T Rowe Price, with a maximum investment of $1 billion. The two parties will work together to promote private market investment products to retail and wealth management clients.

According to the statement, Goldman Sachs will purchase T Rowe Price's shares in the open market, with an expected ownership stake of up to 3.5%, thereby becoming one of its largest shareholders. The two institutions plan to offer target date funds and model portfolios to investment advisors, which will mix publicly traded stocks, bonds, and privately traded private market assets.

Following the announcement, the market reacted positively. T Rowe Price's stock price rose 5.8% at Thursday's close, while Goldman Sachs' stock price also increased by 2.5%.

Giants Join Forces, Targeting Personal Wealth

The collaboration between Goldman Sachs and T Rowe Price provides a new model for Wall Street on how to package complex private assets for individual investors.

For Goldman Sachs, this move opens up a new growth path for its asset management division. Goldman Sachs CEO David Solomon stated:

“With Goldman Sachs' decades of leading innovation in both public and private markets, along with T Rowe Price's expertise in active investing, clients can confidently invest in new opportunities for retirement savings and wealth creation.”

T Rowe Price CEO Rob Sharps believes that the partnership with Goldman Sachs will “build on our extensive capabilities across public and private markets, providing clients with the ability to unlock the potential of private capital.”

The collaboration between Goldman Sachs and T Rowe Price is not an isolated case. As alternative asset classes such as private equity, private credit, real estate, and infrastructure investments become increasingly mainstream, major asset management giants are actively positioning themselves in the personal wealth market.

Prior to this, there have been several similar strategic collaborations in the industry. Vanguard has established strategic alliances with Wellington Management and Blackstone; Capital Group has chosen to collaborate with acquisition pioneer KKR; and BlackRock has independently developed the private market through a series of acquisitions, including the global infrastructure partnership and HPS Investment Partners.

This series of actions indicates that a brand new competitive landscape is forming, with major institutions competing to build their own ecosystems in order to gain a favorable position in the race to provide alternative assets to individual investors.

Mutual Needs, A Two-Way Journey Between Traditional and Alternative

Behind these collaborations are clear strategic demands from all parties. For traditional actively managed fund companies like T Rowe Price, transformation is urgent.

Over the past five years, T Rowe Price has faced significant redemption pressure as investors have continuously shifted from actively managed funds to lower-cost ETFs and passive bond funds, resulting in a stock price decline of over 20% during this period (excluding dividends). The partnership with Goldman Sachs provides a much-needed new growth point.

For private market giants like Goldman Sachs, traditional institutional clients such as large endowment funds, pension funds, and sovereign wealth funds have slowed their investment pace in recent years In order to maintain growth momentum, the industry has turned its attention to retail investors and high-net-worth individuals, viewing them as the core engine for future business growth. Goldman Sachs, through its partnership with Apollo, is able to directly reach its vast retail customer base.

Driving this trend is not only market demand but also support at the policy level. According to reports, after active lobbying by the industry, former U.S. President Trump signed an executive order last month to pave the way for the inclusion of private equity and credit in 401(k) retirement plans.

This policy could open the floodgates for trillions of dollars in retirement savings to flow into the private market.

For Goldman Sachs and its partners, incorporating private assets into mainstream retirement portfolios not only provides individual investors with new sources of returns but also brings disruptive changes to the entire asset management industry