US bank Wells Fargo has agreed to offload its asset management arm to private equity firms GTCR and Reverence Capital Partners for $2.1 billion as it looks to focus on its wealth and brokerage businesses.
Following the closure of the deal, Wells Fargo will maintain a 9.9% equity interest in the new entity, which will also be rebranded.
The transaction is expected to close in the second half of this year and remains subject to closing conditions. Wells Fargo Asset Management (WFAM) has $603 billion in assets under management and 24 offices globally.
WFAM’s current chief executive, Nico Marais, who took up the role in June 2019 after two years as head of multi-asset solutions, will continue to oversee the business as CEO. Former chairman and chief executive of wealth management firm Legg Mason, Joseph Sullivan, will also become executive chairman of the board upon closure of the transaction.
“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, CEO of Wells Fargo’s wealth & investment management division.
The transaction reflects the bank’s strategy to focus on its more profitable businesses, including wealth management and broking, under chief executive Charles Schwarf, who has been leading Wells Fargo as CEO since October 2019.
Sommers added that the deal will also allow Wells Fargo to focus on serving its core consumer and corporate clients.
“We are thrilled to work with Nico and the team at WFAM, and we have tremendous conviction in the calibre and capabilities of the management professionals and leadership team,” said Collin Roche, managing director of GTCR. “The organisation is poised to provide further innovation in the investment marketplace while continuing to deliver high-quality products to its clients.”