Wells Fargo has agreed to sell its asset management division to US private equity firms GTCR and Reverence Capital for $ 2.1 billion, in the latest in a series of deals that have swept the US industry fund management.
The fourth-largest US bank in terms of assets, which has committed to lower the costs and increase profits after years of underperformance, the cash deal said Tuesday. He said he would retain a 9.9% stake in the asset management division and “continue to serve as a major customer and distribution partner.”
Wells Fargo Asset Management (WFAM) has $ 603 billion in client funds, 24 offices around the world, and employs 450 investment professionals. Its owner has been exploring a sale of the business since the end of last year.
“As an independent organization, WFAM will move to the next phase of its growth,” said Milton Berlinski, co-founder and managing partner of New York-based Reverence Capital, promising to expand the manager’s product line. ‘assets.
JPMorgan Chase, whose chief executive Jamie Dimon has publicly said he wants to buy an asset management company, was once seen as a potential buyer.
The divestiture comes as Wells Fargo pledged to reduce its annual cost base by $ 8 billion over the next three years, including more than 250 “efficiency initiatives” by streamlining operations around its core businesses. more essential.
Last month, the bank, led by former JPMorgan executive Charlie Scharf, announced the sale of its Canadian direct equipment finance business to the Toronto-Dominion Bank. The WFAM transaction is expected to close in the second half of the year.
Nico Marais, CEO of WFAM since June 2019, will remain in office with his management team. Joe Sullivan, the former chairman and CEO of Legg Mason, will be named executive chairman of the new company.
“This transaction represents an important step in the growth and evolution of our business,” said Marais. “With this new partnership, our company will be even better positioned to execute our strategy and provide our customers with innovative products and solutions to help them achieve their investment goals.
Wells shares remained stable in pre-market trading. They have risen more than 25% this year so far, surpassing the 18% increase in the KBW Nasdaq Bank index.
A record number of mergers and acquisitions were completed in the asset management industry last year and investors are betting more deals will follow as active fund managers strive to compete with power. passive giants BlackRock and Vanguard.
The need for scale and efficiency was highlighted by Franklin Templeton $ 6.5 billion acquisition by Legg Mason a year ago, and Morgan Stanley Offer of $ 7 billion for rival Eaton Vance, announced in October.
Investor activist Nelson Peltz last year established issues by nearly 10 percent in both Invesco and Janus Henderson, sparking speculation that he could try to steer a marriage between the two underperforming managers.