News emerged Tuesday that the private equity (PE) firms GTCR and Reverence Capital Partners will acquire Wells Fargo Asset Management (WFAM) in a multifaceted deal valued at $2.1 billion.
Technically speaking, GTCR and Reverence Capital have signed a definitive agreement to acquire Wells Fargo Asset Management from the broader Wells Fargo & Co. business. The deal means that GTCR and Reverence Capital will also acquire Wells Fargo Bank’s North American-based business of serving as trustee to its collective investment trusts (CITs) and all related WFAM legal entities.
According to announcements by the PE firms and Wells Fargo & Co., the transaction is expected to close in the second half of this year, subject to customary closing conditions. As part of the transaction, Wells Fargo & Co. will own a 9.9% equity interest and will continue to serve as “an important client and distribution partner.”
For its part, GTCR is a private equity firm mainly focused on leveraged buyouts, leveraged recapitalizations, growth capital and roll-up transactions. Since 1980, GTCR has invested more than $15 billion in over 200 companies. On its website, Reverence Capital Partners says its focus is on “a broad spectrum of middle-market financial services companies.” Its current portfolio already includes Russell Investments and Advisor Group.
According to various statements issued by the parties in this latest deal, Nico Marais, WFAM’s CEO since June 2019, will remain in his position. He and his leadership team will continue to oversee the daily business operations, while Joseph Sullivan, former chairman and CEO of Legg Mason, will be appointed as executive chairman of the board of the new company operating under GTCR and Reverence Capital.
Marais adds that, following the transaction, the WFAM 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.”
While different in many of its most salient details, news of this transaction calls to mind last year’s acquisition of Legg Mason by Franklin Templeton, as well as the largest financial services M&A transaction of 2018—Invesco’s acquisition of OppenheimerFunds from MassMutual, which clocked in as a $5.7 billion stock deal. Important to note, MassMutual did not exit the asset management space. Instead, it became the largest shareholder in a firm managing more than $1 trillion.
As PLANSPONSOR has reported, asset manager and recordkeeper merger and acquisition (M&A) activity will very likely remain an important industry trend for plan fiduciaries to track. Though there are potentially some extra hurdles for plan sponsors coming out of these deals—such as the need to conduct extra due diligence or to enact a request for information (RFI) process—there is also an opportunity to secure better services and software, or even better fees.
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