Wells Fargo To Sell Asset Management Business For $2.1 Billion

San Francisco-based Wells Fargo announced on Tuesday (Feb. 23) that it had reached an agreement to sell its asset management business for $2.1 billion to private-equity firms GTCR LLC and Reverence Capital Partners. That Wells Fargo division manages more than $603 billion.

The company said in a press release that the deal includes Wells Fargo Funds Management, the investment advisor to the funds, along with Wells Capital Management and Wells Fargo Asset Management, both registered investment advisors providing sub-advisory services to certain funds. As part of the transaction, Wells Fargo will own a 9.9 percent equity interest and will continue to serve as an important client and distribution partner.

According to the release, the deal is expected to close in the second half of this year. Four closed-end funds that are part of the deal are Wells Fargo Global Dividend Opportunity Fund, Income Opportunities Fund, Multi-Sector Income Fund and the Utilities and High Income Fund.

When the change in ownership is complete, there will be an “automatic termination of each fund’s investment advisory agreement and sub-advisory agreement(s),” the release stated. The funds’ board of trustees will then approve new arrangements.

Wells Fargo CEO Charles Scharf has been looking to restructure the bank since he took over in 2019 following a sales practices scandal. Since then, he has overseen the sale of the bank’s $10 billion student loan book and indicated that it would likely shed its asset management division, along with the corporate trust and rail operations. Scharf is conducting a thorough review of all of Wells Fargo’s businesses with the goal of simplifying the company, Bloomberg reported. The sale of the asset management arm is in line with steps he has taken to turn around Wells Fargo.

On Feb. 9, however, Wells Fargo decided to keep its private-label credit card business after initially seeking bidders. Retailers use private-label credit cards to sell high-cost items at locations such as boutiques. As a result, pandemic restrictions have hurt the bank’s business.