Sullivan Resurfaces As PE Agrees to a $2.1B Acquisition
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Tuesday, February 23, 2021

Sullivan Resurfaces As PE Agrees to a $2.1B Acquisition

A private equity duo is officially preparing to buy a $603-billion-AUM mutual fund firm, and they're bringing in a giant multiboutique asset manager's ex-chief.

Nicolaas "Nico" Marais
Wells Fargo Asset Management
This morning, Barry Sommers, CEO of the wealth and investment management (WIM) division at Wells Fargo & Company, confirms that the publicly traded, multinational, money center bank has agreed to sell its Wells Fargo Asset Management (WFAM [profile]) arm in a $2.1-billion deal. The buyers, as rumored last month, will be GTCR LLC and Reverence Capital Partners, L.P.. The deal, pending regulatory approval and the like, is expected to close in the second half of this year.

As part of the deal, Wells Fargo will keep a 9.9-percent stake in WFAM, and WFAM employees will also hold what the PE firms are describing as "a significant share of the company's equity interests." WFAM CEO Nico Marais will stay on in his role, and Joe Sullivan (fresh from the Legg Mason sale last year) will join WFAM as executive chairman. Also as part of the deal, according to the companies' public statements, Wells Fargo "will continue to serve as an important client and distribution partner." (In addition to being a giant money center, retail, commercial, and investment bank, Wells Fargo also has one of the four wirehouses.)

Broadhaven Capital Partners, UBS Investment Bank, RBC Capital Markets, and Perella Weinberg advised GTCR and Reverence on the deal, while Wells Fargo's own Wells Fargo Securities weighed in for the seller. In terms of legal counsel, Kirkland & Ellis LLP supported the buyers, while Skadden, Arps, Slate, Meagher & Flom LLP advised Wells Fargo.

WFAM's Marais calls the deal "a significant milestone in the growth and evolution" of WFAM. Colin Roche, managing director of GTCR, lauds "the caliber and capabilities of the management professionals and leadership team" at WFAM.

"The organization is poised to provide further innovation in the investment marketplace while continuing to deliver high quality products to its clients," Roche states. "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."

Milton Berlinski, co-founder and managing partner of Reverence, describes the deal as an "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," Berlinski states.

"The organization has the potential to become a leading scale asset management business with a focus on client outcomes and creative solutions in all of the markets that it serves," Sullivan states. "I believe that this transition into independent ownership will be a catalyst for growth and innovation, and it represents an opportunity to re-invest in the business and build a more entrepreneurial operating model from within the organization."

New York City-based Reverence already backs a pair of big asset managers, Russell and Victory Capital, as well as an indie B-D network, Advisor Group. The firm focuses on middle-market financial services companies and takes both controlling and "influence-oriented minority" stakes.

Chicago-based GTCR already backs a mutual fund back-office provider, Ultimus, and a big 401(k) and wealth management RIA, CapTrust Financial Advisors. "Financial services and technology" is one of four areas of investment focus for the firm.

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