Wells Fargo to sell money management unit in $2.1 billion deal – Pensions & Investments

Wells Fargo Asset Management is to be sold to two private equity firms in a $2.1 billion deal.

Parent firm Wells Fargo & Co. said Tuesday it had entered into a definitive agreement to sell the $603 billion money manager to private equity managers GTCR and Reverence Capital Partners. The deal is set to complete in the second half of the year, subject to customary conditions.

Under the agreement, Wells Fargo will own a 9.9% equity interest and continue to be an important client and distribution partner, a news release said. The split between GTCR and Reverence could not immediately be learned.

The business will be rebranded upon completion of the transaction. Nico Marais will remain CEO of WFAM and the leadership team will continue to oversee the business.

“Operating as an independent firm as a portfolio company of GTCR and Reverence Capital will provide numerous benefits to WFAM’s clients, employees, and strategic partners — including Wells Fargo,” Barry Sommers, CEO of Wells Fargo’s wealth and investment management division, said in the release. “At the same time, this transaction reflects Wells Fargo’s strategy to focus on businesses that serve our core consumer and corporate clients, and will allow us to focus even more on growing our wealth and brokerage businesses.”

Conversations among Wells Fargo, the money management unit and potential buyers have been ongoing for about six months, Mr. Marais said in an interview. The parent company “has been very gracious in allowing me to play a central role in deciding … who the partner would be.”

A key decider on a suitor was that GTCR and Reverence believed in WFAM’s strategy — to be an outcome or solutions-focused business — and also that the firms were aligned in terms of putting clients first. The businesses will collectively invest in people, operations and distribution, because in a longer-term relationship “you do not create value by just slashing costs” — a critical aspect of a private equity deal, Mr. Marais said.

Wells Fargo’s decision to retain a 9.9% stake in the money manager is also a “compliment” for WFAM, Mr. Marais said, adding, “Wells Fargo is changing from being an owner to becoming one of our most important clients.”

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