In one of the largest asset management deals in a decade, the $603 billion Wells Fargo Asset Management business is being acquired by two private equity firms for $2.1 billion.
The asset management business had been viewed as up for sale for several months.
The deal, which is expected to close in the second half, transfers ownership of the global asset management business represented by more than 450 investment professionals from Wells Fargo & Co. to GTCR and Reverence Capital Partners.
According to the terms of the deal, Wells Fargo & Co. will retain a 9.9% equity interest and will continue to serve as an “important client and distribution partner.”
“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,” said Barry Sommers, chief executive of Wells Fargo’s Wealth & Investment Management division.
“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,” Sommers said in a prepared statement.
According to the press release, Nico Marais, WFAM’s CEO since June 2019, will remain CEO; he and his leadership team will continue to oversee the business.
Joseph Sullivan, former chairman and CEO of Legg Mason, will be appointed as executive chairman of the board of the new company following the closing of the transaction.
“This transaction represents a significant milestone in the growth and evolution of our firm,” Marais said in the statement. “Through this new partnership, our business will be even better positioned to execute our strategy and provide our clients with innovative products and solutions to help them reach their investment goals.”
The deal is the latest in a growing trend of private equity investors charging into the lucrative wealth management space.
“We are very enthusiastic about this exceptional opportunity to partner with such talented investment professionals and to create an independent company that will grow over the long term and further enhance its innovative products and creative solutions for its clients,” Milton Berlinski, co-founder and managing partner of Reverence Capital, said in a prepared statement. “As an independent organization, WFAM will pivot to the next phase of its growth and is positioned to expand on its solutions-based approach, multi-asset offerings, retail separately managed accounts, and customized investment products.”