Wells Fargo close to deal with buyout firms for asset management business

Wells Fargo close to deal with buyout firms for asset management business

Wells Fargo Bank branch is seen in New York
FILE PHOTO: Wells Fargo Bank branch is seen in New York City, U.S., March 17, 2020. REUTERS/Jeenah Moon

REUTERS: Wells Fargo is in exclusive talks to sell its asset management business, which manages more than US$607 billion on behalf of customers, to a private equity consortium led by GTCR LLC and Reverence Capital Partners, according to people familiar with the matter.

The divestment would represent the US bank's biggest shake-up since former Bank of New York Mellon Chief Executive Charles Scharf joined as CEO in 2019.

The exact price being negotiated could not be learned, but Reuters previously reported that Wells Fargo was seeking more than US$3 billion for the unit.

The talks could still end without a deal, the sources said, requesting anonymity because the matter is confidential.

Wells Fargo declined to comment. Chicago-based GTCR and New York-based Reverence did not respond to requests for comment.

The sale of the asset management business is one of many steps taken by Scharf to turn Wells Fargo around following a years-old sales practices scandal. He has been cutting costs and shedding noncore businesses. Earlier on Thursday, Wells Fargo announced a deal to sell its Canadian direct equipment finance business to Toronto-Dominion Bank.

Last month, Wells Fargo said it would sell its private student loan portfolio to a group of investors.

The bank is scheduled to report fourth-quarter earnings on Friday, and Scharf is expected to unveil a new strategic plan for the bank.

Reverence Capital, co-founded by Goldman Sachs alum Milton Berlinski, and GTCR have been active in acquiring businesses in the asset management sector.

In 2019, Reverence bought 75per cent of Phoenix-based independent financial advisory firm Advisor Group Inc, while last year GTCR took a minority stake in Raleigh, North-Carolina's CAPTRUST Financial Advisors, which valued the registered investment adviser at US$1.25 billion.

Source: Reuters