Please ensure Javascript is enabled for purposes of website accessibility

Wells Fargo to Sell Asset Management Division

By Bram Berkowitz - Updated Feb 23, 2021 at 11:44AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The bank plans to deal the segment, which has more than $600 billion in assets under management, to two private equity firms.

After months of rumors, Wells Fargo (WFC 7.55%) announced today that it plans to sell its asset management arm to the private equity firms GTCR and Reverence Capital Partners for $2.1 billion.

Under the agreement, Wells Fargo will retain a 9.9% equity stake in the unit, and will continue to be a client and distribution partner.

In selling the unit, Wells Fargo will be off-loading $603 billion in assets under management, 24 offices, and 450 employees. But the move continues the bank's strategy of exiting business lines that are not core to its U.S. franchise.

"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," Barry Sommers, CEO of Wells Fargo's wealth and investment management division, said in a statement.

Wells Fargo

Image source: Wells Fargo.

Rumors began circulating last October that Wells Fargo may sell its asset management unit. At the time, various media outlets reported that people familiar with the matter said the unit could fetch as much as $3 billion.

But the $2.1 billion price tag likely reflects the 10% stake Wells Fargo will retain. 

In past months, the bank has made other moves to sharpen its strategic focus. In December, Wells Fargo sold its student loan portfolio, which had a balance of roughly $10 billion. But it reportedly chose to keep its private-label credit card business that it had also been rumored to be shopping around.

The sale of the asset management arm is expected to close in the second half of the year. Shares of Wells Fargo traded more than 1% lower around 10 a.m. EST this morning.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$40.76 (7.55%) $2.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.