UPDATE 2-Wells Fargo Sells Asset Management Line to Private Equity Firms for $ 2.1 Billion


(Add quotes, price details, details and context)

By David French and Noor Zainab Hussain

February 23 (Reuters) – Wells Fargo & Co on Tuesday announced that it has agreed to sell its asset management business, which manages more than $ 603 billion on behalf of clients, to private equity firms GTCR LLC and Reverence Capital Partners for $ 2.1 billion.

The sale represents the biggest upheaval for the U.S. bank since former Bank of New York Mellon boss Charles Scharf joined the CEO role in 2019. Reuters announced in January that a Wells Fargo deal with buyout companies was in progress.

San Francisco-based Wells Fargo will own a 9.9% stake in the asset management unit and will continue as a customer and distribution partner, the bank said. The $ 2.1 billion sale price includes the value of Wells Fargo’s stake in the new company, GTCR chief executive Collin Roche said in an interview.

The company, which will be renamed once the deal is concluded in the second half of 2021, will continue to be led by Nico Marais as CEO. Joseph Sullivan, the former head of Legg Mason, will join as executive chairman, according to the Wells Fargo statement.

Under the new owner, the focus would be on growing its business with retail clients, including a strong existing position in separately managed accounts, Roche said, adding that further investment would be made in the offering. technological development of the company.

The sale of the asset management business is in line with measures taken by Scharf to redress Wells Fargo following a business practices scandal.

The bank has also agreed in recent weeks to sell its portfolio of private student loans and its Canadian direct equipment financing activities.

“This is not a business that would typically be for sale, so it has become an opportunity for both of our companies,” Milton Berlinski, managing partner of Reverence Capital, told Reuters, adding that the size and the product mix of the franchise would make it well positioned to grow. as an independent company.

Wells Fargo Securities advised the bank on the divestiture, with Broadhaven Capital Partners and UBS Group providing financial advice to the buyers. The respective legal advisers were Skadden, Arps, Slate, Meagher & Flom and Kirkland & Ellis. (Reporting by David French in New York and Noor Zainab Hussain in Bengaluru; Editing by Aditya Soni and Will Dunham)

Leave A Reply

Your email address will not be published.