Goldman Sachs to buy Folio, gaining greater access to RIA channel

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Goldman Sachs is buying Folio Financial, a self-clearing custodian with $11 billion in assets, in a deal that will move the investment bank further into the independent advisory business.

The acquisition “fulfills Folio’s long-term goal of partnering with a preeminent financial services firm,” Folio CEO Steve Wallman said in a statement that was posted to the company’s website May 14.

Wallman will remain in charge of Folio, which does not anticipate any changes to the custody business, according to an email the firm sent to an RIA and which was seen by Financial Planning.

Terms of the deal, which is expected to close in the third quarter of 2020, were not disclosed.

The deal will give Goldman greater access to the RIA business and expands upon its previous acquisition of United Capital a year ago.

Approximately 450 RIAs use Folio for custody, according to the firm. It was the first custodian to offer fractional share trading for advisors and their clients.

A Goldman spokesman declined to provide terms of the deal. He confirmed that Folio’s custodial division will be incorporated into the investment bank’s global markets division, as originally reported by Reuters.

Folio has approximately 160 employees. It is likely that Goldman will keep most of them on, considering it is a new business at the investment bank, says a person familiar with the matter, who asked not to be identified in order to discuss it.

Folio recently acquired the client accounts of Motif, a thematic investing company. Goldman Sachs had led a funding round for Motif in April 2013, according to Crunchbase, and has said it may become the index provider of the underlying indices for the five Motif ETFs it issued last year.

Discussions of the Folio acquisition began in 2019, according to Wallman’s statement, which noted that both companies anticipate wanting to expand ESG investing.

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M&A Clearinghouses/custodians Goldman Sachs RIAs Client acquisition