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Goldman Sachs has emerged as the frontrunner in the pursuit to acquire Palmer Square Capital Management, a $37 billion credit manager, as the investment bank aims to bolster its asset management division, according to a Bloomberg report citing unnamed sources familiar with the situation. The Wall Street firm is in talks to acquire the Kansas-based Palmer Square, which was founded and is currently led by the married duo Chris and Angie Long.

No formal agreement has been reached yet, and the negotiations could still conclude without a deal, according to the sources. Neither Goldman Sachs nor Palmer Square commented on the ongoing discussions. Palmer Square has established a significant presence in collateralized loan obligations (CLOs), managing approximately $27 billion in assets, which is a substantial portion of the $27 billion in assets under management that the firm oversees.

An acquisition would allow Goldman to substantially expand its footprint in the CLO sector, an area where the bank's asset management division currently lags behind some of its key competitors. The US CLO market has expanded from around $325 billion to over $1.3 trillion in the past 15 years. In addition to CLOs, Palmer Square also manages a publicly traded business development company.

Founded by Chris Long after the global financial crisis, the firm initially focused on opportunities presented by credit market disruptions. Angie Long joined the company later and became chief investment officer, while Chris Long serves as chairman and chief executive. Both previously worked together at JPMorgan, where Angie Long contributed to the development of the bank's credit derivatives business.

Palmer Square started managing CLOs in 2013 and has grown to become one of the larger managers in the market.