Wells Fargo Enters Agreement with GTCR and Reverence Capital Partners to Sell Wells Fargo Asset Management

Rhea-AI Summary

Wells Fargo has entered a definitive agreement to sell Wells Fargo Asset Management (WFAM) to GTCR LLC and Reverence Capital Partners for $2.1 billion. The transaction, expected to close in the second half of 2021, includes WFAM’s collective investment trusts and all related entities. Wells Fargo will retain a 9.9% equity interest and remain a client and distribution partner. WFAM manages $603 billion in assets and will operate independently post-sale, benefiting from the experience of the private equity firms involved.

Positive

• Wells Fargo Asset Management (WFAM) has $603 billion in assets under management.
• The sale allows Wells Fargo to focus on its core consumer and corporate client services.
• WFAM will benefit from the resources and expertise of GTCR and Reverence Capital.
• Continuity in leadership with Nico Marais remaining as CEO post-sale.

Negative

• None.

Wells Fargo & Company (NYSE: WFC) today announced that it has entered into a definitive agreement to sell Wells Fargo Asset Management (WFAM) to GTCR LLC and Reverence Capital Partners, L.P. This sale includes Wells Fargo Bank N.A.’s business of acting as trustee to its collective investment trusts and all related WFAM legal entities.¹ 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 own a 9.9% equity interest and will continue to serve as an important client and distribution partner.

WFAM is a leading asset management firm with $603 billion in assets under management,² 24 offices globally, and specialized investment teams supported by more than 450 investment professionals. WFAM and its investment teams provide a broad range of differentiated investment products and solutions to help its diverse range of clients meet their investment objectives. “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. 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,” said Barry Sommers, CEO of Wells Fargo’s Wealth & Investment Management division.

GTCR and Reverence Capital are two respected private equity firms with deep experience investing in the asset management space. The two firms have successful track records of growing wealth and asset management businesses for the long term and will provide WFAM with the resources and expertise to deepen its innovative investment solutions. Upon closing of the transaction, the new, independent company will be rebranded.

Nico Marais, WFAM’s CEO since June 2019, will remain CEO; 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.

“This transaction represents a significant milestone in the growth and evolution of our firm,” said Marais. “Through this new partnership, our 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.”

Collin Roche, managing director of GTCR, said: “We are thrilled to work with Nico and the team at WFAM, and we have tremendous conviction in the caliber and capabilities of the management professionals and leadership team. The organization is poised to provide further innovation in the investment marketplace while continuing to deliver high-quality products to its clients. The team, underpinned by its diversity, client-orientation, and collaborative culture, has delivered strong performance, and we will work to reinforce these values and sustain this performance. Along with our partners at Reverence Capital, we are committed to the long-term success of the organization.”

Milton Berlinski, co-founder and managing partner of Reverence Capital, said: “We are very enthusiastic about this exceptional opportunity to partner with such talented investment professionals and to create an independent company that will grow over the long term and further enhance its innovative products and creative solutions for its clients. As an independent organization, WFAM will pivot to the next phase of its growth and is positioned to expand on its solutions-based approach, multi-asset offerings, retail separately managed accounts, and customized investment products.”

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.

About Wells Fargo

Wells Fargo & Company is a leading financial services company that has approximately $1.9 trillion in assets³ and proudly serves one in three U.S. households and more than 10% of all middle market companies in the U.S. We provide a diversified set of banking, investment, and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. Wells Fargo ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low-carbon economy. News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo.

1. Wells Fargo Asset Management (WFAM) includes Wells Fargo Funds Management, LLC; Wells Capital Management Inc.; Galliard Capital Management, Inc.; Wells Fargo Asset Management (International) Ltd.; Wells Fargo Asset Management Luxembourg S.A.; and Wells Fargo Funds Distributor, LLC.
2. As of Dec. 31, 2020.
3. As of Dec. 31, 2020.

About GTCR

Founded in 1980, GTCR is a leading private equity firm focused on investing in growth companies in the Healthcare, Financial Services & Technology, Technology, Media & Telecommunications, and Growth Business Services industries. The Chicago-based firm pioneered The Leaders Strategy™ — finding and partnering with management leaders in core domains to identify, acquire and build market-leading companies through transformational acquisitions and organic growth. Since its inception, GTCR has invested more than $20 billion in over 250 companies. For more information, please visit www.gtcr.com.

About Reverence Capital Partners

Reverence Capital Partners is a private investment firm focused on thematic investing in leading global, middle-market Financial Services businesses through control and influence oriented investments in 5 sectors: (1) Depositories and Finance Companies, (2) Asset and Wealth Management, (3) Insurance, (4) Capital Markets and (5) Financial Technology/Payments. The firm was founded in 2013 by Milton Berlinski, Peter Aberg and Alex Chulack, who collectively bring over 90 years of advisory and investing experience across a wide range of financial services sectors. For more information, please visit www.reverencecapital.com.

Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management companies owned by Wells Fargo & Company. Unless otherwise stated, WFAM is the source of all data (which is current, or as of the date stated); content is provided for informational purposes only with no representation regarding its adequacy, accuracy or completeness and should not be relied upon; views, opinions, assumptions or estimates are not necessarily that of Wells Fargo & Company, WFAM or affiliates and are subject to change without notice; and information does not contain investment advice, an investment recommendation or investment research, as defined under local regulation of the respective jurisdiction.

This information, unless otherwise stated, is prepared for professional clients, professional investors, institutional investors, investment professionals, eligible counterparties or qualified investors only (as defined by the local regulation in the respective jurisdiction), and members of the press. Not for retail use.

Distribution in the United States: Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management companies owned by Wells Fargo & Company. These companies include but are not limited to Wells Capital Management Inc. and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).

Collective Funds are a Wells Fargo Bank–sponsored collective investment. For more complete information concerning this fund, including risks and expenses, please obtain a copy of the most recent disclosure statement at wellsfargofunds.com/collective and read it carefully before investing in the fund. A collective investment trust (CIT) fund is a pooled investment vehicle that is exempt from SEC registration as an investment company under Section 3(c)(11) of the Investment Company Act of 1940 and maintained by a bank or trust company for the collective investment of qualified retirement plans. CITs are authorized by the Office of the Comptroller of the Currency (OCC) and are also known as A2 funds, referring to the section in OCC rules that defines them. The fund is not a mutual fund and is not subject to the same registration requirements and restrictions as mutual funds. The Collective funds are only offered within the United States.

Distribution in the United Kingdom (UK), European Economic Area (EEA) and Switzerland: Wells Fargo Asset Management (WFAM) is the trade name for certain investment management companies owned by Wells Fargo & Company, including, but not limited to, Wells Fargo Asset Management (International) Limited (WFAMI Ltd.), an affiliated investment management company within WFAM, authorised and regulated by the UK Financial Conduct Authority (FCA), and Wells Fargo Asset Management Luxembourg S.A. (WFAML), authorized and regulated by the Commission de Surveillance du Secteur Financier (CSSF). WFAML has branches in Frankfurt and Paris and is allowed to provide services on a cross-border basis in the EEA. This material has been approved for distribution in the UK by WFAMI Ltd., for the purposes of Section 21 of the Financial Services and Markets Act 2000 (FSMA).

Distribution in the United Arab Emirates (excluding Dubai International Financial Centre and Abu Dhabi Global Market): materials are distributed by Wells Fargo Bank National Association (WFBNA) DIFC Branch, regulated by the Dubai Financial Services Authority (DFSA). This material, and the information contained herein, does not (intend to) constitute a public offer in the United Arab Emirates (UAE) and should not be construed as such. The materials have not been approved by or licensed or registered with the UAE Central Bank, the SCA, the DFSA, the Financial Services Regulatory Authority or any other relevant licensing authorities or governmental agencies in the UAE (the authorities). The authorities assume no liability for any investment that the named addressee makes as a non-natural qualified investor.

Distribution in Australia: Wells Capital Management Inc. is exempt from the requirements to hold an Australian financial services license in respect of the financial services it provides to wholesale clients in Australia. Wells Capital Management Inc. is regulated under US laws, which differ from Australian laws. Any offer or documentation provided to Australian recipients by Wells Capital Management Inc. in the course of providing the financial services will be prepared in accordance with the laws of the United States and not Australian laws.

Distribution in Hong Kong: this document is distributed in Hong Kong by Wells Fargo Securities Asia Limited (WFSAL), a Hong Kong–incorporated company licensed and regulated by the Securities and Futures Commission to carry on types 1, 4, 6 and 9 regulated activities, as defined in the Securities and Futures Ordinance (Cap. 571 The Laws of Hong Kong, the SFO).

Distribution in South Korea: this document is distributed in the Republic of Korea by Wells Capital Management Inc., which is registered with the Financial Services Commission pursuant to the Financial Investment Services and Capital Markets Act (the Act) to conduct investment advisory and discretionary investment business with qualified professional investors (as defined in the Act).

Distribution in Singapore: The document is distributed in Singapore by Wells Fargo Bank N.A., Singapore Branch (WFBNA SG), a bank licensed under the Banking Act and exempt from the requirement to hold a capital markets services license to carry on business in the regulated activities of “dealing in capital markets products that are securities and units in a collective investment scheme” and “fund management” as defined in the Securities and Futures Act (SFA).

Distribution in Japan: Wells Fargo Asset Management is a trade name used by the asset management businesses of Wells Fargo & Company. Certain Wells Fargo Asset Management products and services are marketed by Wells Fargo Securities (Japan) Co., Ltd. (“WFSJ”), a Japanese financial instruments business operator registered with the Kanto Local Finance Bureau, to conduct broking, dealing and distribution of Type 1 and Type 2 financial instruments and agency or intermediary service for entry into investment advisory and discretionary investment contracts.

Distribution in Canada: Wells Capital Management Inc., representing the WFAM brand in Canada, is exempt from the registration requirements for the conduct of certain financial services activities in selected (permitted) jurisdictions in Canada and all such activities are otherwise subject to applicable Canadian securities laws.

Distribution in Latin America: Wells Fargo & Company conducts business globally. Outside the US, Wells Fargo & Company conducts business through various companies, including duly authorised and regulated subsidiaries and affiliates in Asia, Canada, Europe, the Middle East, Africa and Latin America.

© Wells Fargo & Co., 2021. All rights reserved. PAR-0221-00725.

INVESTMENT PRODUCTS: NOT FDIC INSURED ● NO BANK GUARANTEE ● MAY LOSE VALUE

WF-CF

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FAQ

What is the significance of the WFAM sale to GTCR and Reverence Capital?

The sale allows Wells Fargo to concentrate on its core businesses while providing WFAM with the resources to grow independently.

When is Wells Fargo expected to complete the sale of WFAM?

The transaction is expected to close in the second half of 2021, pending customary closing conditions.

What is the purchase price for Wells Fargo Asset Management?

The purchase price for Wells Fargo Asset Management is $2.1 billion.

How will this transaction affect Wells Fargo's investment services?

Wells Fargo will focus on enhancing its wealth and brokerage services while continuing as an important client for WFAM.