Wells Fargo & Company has entered into a definitive agreement to sell Wells Fargo Asset Management (WFAM)—including the business of acting as trustee to its collective investment trusts and all related WFAM legal entities.
The two buyers, GTCR LLC and Reverence Capital Partners, LP, are private equity firms with experience investing in the asset management space. Upon closing of the transaction, the new, independent company will be rebranded.
According to a press release, under the terms of the agreement, the purchase price is $2.1 billion. The transaction is expected to close in the second half of 2021, subject to customary closing conditions. As part of the transaction, Wells Fargo will retain a 9.9% equity interest—and says it will continue to serve as “an important client and distribution partner.”
WFAM has $603 billion in assets under management, 24 offices globally, and what it described as “specialized investment teams” supported by more than 450 investment professionals. The move was described as reflecting Wells Fargo’s strategy to focus on businesses that serve its core consumer and corporate clients, and one that would allow it to “focus even more on growing our wealth and brokerage businesses,” according to Barry Sommers, CEO of Wells Fargo’s Wealth & Investment Management division.
Nico Marais, WFAM’s CEO since June 2019, will remain CEO, and both he and his leadership team will continue to oversee the business. 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.
Wells Fargo Securities, LLC served as exclusive financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to Wells Fargo in connection with the transaction.
Other Aspects
Alongside that announcement, Wells Fargo also announced the sale of their closed-end funds’ advisor and subadvisors, specifically:
- 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)
The firm noted that consummation of the transaction with GTCR and Reverence Capital Partners would result in the automatic termination of each fund’s investment advisory agreement and sub-advisory agreement(s). The funds’ Boards of Trustees (the Boards) will be asked to approve new investment advisory arrangements with the new company. If approved by the Boards, and to the extent required by applicable law, the new investment advisory arrangements with the new company will be presented to the shareholders of each fund for approval, and, if approved by shareholders, would take effect upon the closing of the transaction. As noted above, the transaction is expected to close in the second half of 2021, subject to “customary closing conditions.”
