Goldman Sachs Will Buy $1 Billion of T. Rowe Price Shares in New Partnership

Robert Sharps, chief executive officer of T. Rowe Price Group. (Al Drago/Bloomberg)

Goldman Sachs is set to become one of the largest shareholders in the challenged asset-management firm T. Rowe Price , and the two companies will work together to create new products invested in public and privately held assets.

The bank plans to buy up to $1 billion of shares in Baltimore-based T. Rowe over time through a series of purchases in the open market, up to 3.5% of T. Rowe’s outstanding stock. Goldman is using its balance sheet to make the investment, and the firm’s equities traders will determine over what period they make the trades, a Goldman spokeswoman said.

In addition, Goldman and T. Rowe will partner to offer retirement and wealth-management investors products that include privately held, so-called alternative assets.

Shares of T. Rowe rose 7.8% in premarket trading Thursday after Barron’s reported the investment. Through the market’s close on Wednesday, the stock has fallen 7% this year while the S&P 500 has gained nearly 10%.

The two firms plan to launch co-branded model portfolios and target-date strategies that will give investors exposure to private markets and use offerings from Oak Hill Advisors, the $98 billion private credit money manager that T. Rowe bought four years ago.

The deal underlines major forces shaping the asset- and wealth-management industries. The Trump administration has given money managers a green light to start adding illiquid assets, such as private equity and private credit, to retirement funds after much lobbying from Wall Street. Money managers are seizing on that opportunity to boost their businesses and charge higher management fees on illiquid funds.

Meanwhile, fund managers whose mutual and exchange-traded funds command far lower fees than they did years ago are joining forces to stay competitive and pull in assets. Average expense ratios for equity and bond mutual funds have fallen 62% and 55%, respectively, from the mid-1990s through 2024, according to the Investment Company Institute.

T. Rowe Chief Executive Officer Rob Sharps said in an interview with Barron’s that while the partnership allows T. Rowe to “accomplish some things that in relatively short order, at least, we wouldn’t be able to accomplish on our own,” it isn’t a sign that Goldman will buy the firm.

“If the question is—is this a precursor to Goldman acquiring” T. Rowe, Sharps said, “it’s not.” Sharps said the range of capabilities they are bringing together “allow us to craft unique solutions for both investors that are accumulating wealth, and investors that are preparing for retirement, and they’re solutions that neither of us could create alone.”

Sharps said he was having conversations with Goldman President and Chief Operating Officer John Waldron for more than a year about the potential to work together on a deal to bring together its capabilities. The two firms’ relationship stretches back years: T. Rowe and Oak Hill Advisors are clients of Goldman’s private bank, while T. Rowe is a client of Goldman’s outsourced chief investment officer business.

“We’ve spent time over the past couple of years thinking about the retirement channel, and it’s a channel that we think has more opportunities to broaden the investment products, especially around privates and alternatives,” said Marc Nachmann, Goldman’s global head of asset and wealth management, in a joint interview with Sharps.

Headwinds to the broader active-management industry have dogged T. Rowe. The firm, with $1.7 trillion of assets under management as of July 31, has recorded 17 straight quarters of net outflows. Its last quarter of net inflows was the first quarter of 2021, at $1.2 billion, and the firm’s stock is down some 50% from its all-time highs in 2021.

But retirement has been a notable bright spot for the firm; in the U.S. it is the largest manager of active target-date products.

Sharps said on a call to discuss second-quarter earnings last month that he expects firmwide outflows to continue in the second half of 2025, though “our leading indicators would suggest that second-half outflows will be lower than first-half levels.”

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com