Wells Fargo sells asset management business for $2.1 billion as CEO shrinks bank
Wells Fargo will sell its asset management business to two private equity firms for $2.1 billion, the bank announced Tuesday, the first major sale of CEO Charlie Scharf’s drive to simplify the sprawling bank.
Chicago-based GTCR and New York-based Reverence Capital
Partners will buy Wells Fargo Asset Management from the bank. Wells Fargo will
hold on to 9.9% and remain involved as “client and distribution partner” of the
asset manager, according to a bank press release.
“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,”
said Barry Sommers, the head of Wells Fargo’s wealth & investment management
division, in a statement.
The transaction is expected to close in the second half of
2021.
Established in 1995, Wells Fargo Asset Management is chiefly
the bank’s mutual fund business and manages $603 billion on behalf of
institutions, financial advisors and individuals. It is separate from Wells
Fargo’s private bank, Abbot Downing and Wells Fargo Advisors.
More than 1,500 people work for Wells Fargo Asset Management
in 24 cities, including some in Charlotte. The bank employs about 27,000 people
in Charlotte and is the city’s largest private employer. Nico Marais will
remain CEO of the asset manager after the transaction.
Milton Berlinski, the managing partner of Reverence Capital,
said in a statement that he wants to expand the asset manager’s offerings as an
independent company. “As an independent organization, WFAM will pivot to the
next phase of its growth,” Berlinski said.
The sale is the biggest exit of a business by Wells Fargo
under Scharf.
Since he took over in 2019, Scharf has pledged to cut the
size of the bloated and underperforming bank, including exiting businesses that
Scharf thought weren’t core to Wells Fargo. Mutual funds, it is apparent, were
not core.
Tuesday’s announcement follows the smaller sales of the
bank’s private student loan portfolio in 2020 and Canadian direct equipment
finance business this year.
The asset management sale will not have a material impact on
the bank’s ceiling on assets that the Federal Reserve placed on it as a
punishment for its fake-accounts scandal. The assets that Wells Fargo Asset
Management oversees are those of external clients.
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