Wells Fargo has entered into a definitive agreement to sell Wells Fargo Asset Management (WFAM) to GTCR and Reverence Capital Partners for US$2.1 billion, while also offloading four of its closed-end funds.
The sale includes Wells Fargo Bank N.A.'s business of acting as trustee to its collective investment trusts and all related WFAM legal entities.
Wells Fargo said 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 the client and distribution partner.
WFAM has US$603 billion in assets under management, 24 offices globally, and specialised investment teams supported by more than 450 investment professionals.
"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," chief executive of Wells Fargo wealth and investment management Barry Sommers said.
"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."
GTCR and Reverence Capital are two private equity firms with experience investing in the asset management space.
Wells Fargo said 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 investment solutions.
Wells Fargo confirmed that once the transaction is complete the new, independent company will be rebranded.
WFAM chief executive Nico Marais, who has been in the role since June 2019, will remain in his position and his leadership team will continue to oversee the business.
Additionally, the former chair and chief executive of Legg Mason Joseph Sullivan has been appointed as executive chair of the board of the new company.
Marais said the transaction represents a significant milestone in the growth and evolution of the firm.
"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," Marais said.
Managing director of GTCR Collin Roche said he was excited about working with Marais and the WFAM team.
"We have tremendous conviction in the calibre and capabilities of the management professionals and leadership team," Marais said.
"The organisation is poised to provide further innovation in the investment marketplace while continuing to deliver high-quality products to its clients."
Marais commended the team's diversity and client-first approach. He said the WFAM team has delivered a strong performance and together they will work to sustain their achievements.
Reverence Capital co-founder and managing partner Milton Berlinski 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 said the transaction will result in the automatic termination of four of its closed-end fund's investment advisory agreement and sub-advisory agreements.
The funds' boards of trustees will be asked to approve new investment advisory arrangements with the new company.
If approved by the boards, and shareholders the new investment advisory arrangements will take effect at the completion of the transaction.
The four funds include the Wells Fargo Global Dividend Opportunity Fund, the Wells Fargo Income Opportunities Fund, the Wells Fargo Multi-Sector Income Fund and the Wells Fargo Utilities and High Income Fund.