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Goldman Sachs to Divest Remaining Stake in Rothesay Life


The Goldman Sachs Group, Inc. GS has agreed to sell its remaining stake in Rothesay Life Plc to its existing shareholders, Blackstone Group LP BX, Massachusetts Mutual Life Insurance Co. and GIC Pte, Singapore’s sovereign-wealth fund. The transaction is expected to be completed by the end of 2017.

Per a Bloomberg article, the deal has been valued at $2.6 billion.

Upon the execution of this deal, the company’s shareholders will acquire a portion of Goldman Sachs’ stake, with Blackstone and GIC holding the highest percentage.

Prior to this deal, Blackstone and GIC both held equal stakes of about 28.5% in Rothesay Life while Massachusetts Mutual Life Insurance held 7%.

Founded in 2007, Rothesay Life is a major buyout insurance company. Its clientele includes British Airways, General Motors, the Merchant Navy Officers Pension Fund, Lehman Brothers, Philips and many more.

Following the investment made by the three stakeholders in Rothesay Life in December 2013, the assets under management have grown about 22% in a span of three years. This impressive growth has been driven by corporate defined benefit pension transfers, back-book reinsurance and corporate acquisitions.

Goldman Sachs’ strong capital position keeps it well poised to undertake growth initiatives such as the recent digital initiative, under which it launched a digital consumer lending platform — Marcus by Goldman Sachs. Further its expense reduction initiatives have been impressive.

However, despite benefiting from its diversified businesses, Goldman Sachs has been witnessing declining net revenue in its Institutional Client Services division due to the prevailing macroeconomic challenges.

Shares of Goldman Sachs have lost 3.6% year to date, underperforming the 2.6% rally for the industry.

Currently, Goldman Sachs carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks in the same space are Raymond James Financial, Inc. RJF and Nomura Holdings, Inc. NMR. Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Raymond James’ Zacks Consensus Estimate witnessed an upward revision of 3.3% for current-year earnings, over the past 60 days. Also, its shares have gained 45.8% in a year’s time.

Nomura witnessed an upward earnings estimate revision of 5.5% for the current year, over the last 60 days. Its share price has increased 30.3% in the past 12 months.

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