(Photo: Daniel Tepper/Bloomberg)
Wells Fargo is selling its Asset Management unit, which includes some $603 billion in assets and 450 investment professionals, to private equity firms GTCR and Reverence Capital Partners for $2.1 billion.
The transaction is expected to close in the second half of 2021, when the new company will be rebranded. As part of the deal, Wells Fargo will own a 9.9% equity interest and will continue to serve as a client and distribution partner.
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The news comes about five weeks after Reuters reported that the deal was in the works. It also follows news last week that the bank had secured the Federal Reserve's acceptance of a proposal it submitted in September to address lapses in governance and risk management, as required by a 2018 enforcement action.
"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, in a statement.
"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 explained.
Nico Marais, WFAM's CEO since June 2019, will remain CEO. Joseph A. 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.
Closed-end funds
As part of the deal, the boards of four closed-end funds will be asked to approve new investment advisory arrangements with the new company.
If approved by the boards, these arrangements will then be put to a vote of their shareholders and, if approved, would take effect upon the closing of the transaction.
The four funds are:
- Wells Fargo Global Dividend Opportunity Fund (NYSE: EOD)
- Wells Fargo Income Opportunities Fund (NYSE American: EAD)
- Wells Fargo Multi-Sector Income Fund (NYSE American: ERC)
- Wells Fargo Utilities and High Income Fund (NYSE American: ERH)
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Janet Levaux
Editor-in-Chief Janet Levaux has covered the financial markets since 1991, with a focus on financial advisors since 2005. After graduating from Yale and the Johns Hopkins School of Advanced International Studies (SAIS), where she studied global economics, Janet worked as a freelance financial and business writer in Japan, and then as a reporter and editor for Investor's Business Daily and the Bay Area News Group in California. She earned an MBA in 2007 and since then has helped lead key ThinkAdvisor projects like its Neal-Award winning reporting on Ken Fisher, Luminaries awards program and Women in Wealth newsletter.
