Deals & People February 23, 2021

Reverence and GTCR, PE Firm That Backed CAPTRUST, To Buy Wells Fargo AM

The sizable transaction exhibits the continued interest of private equity firms in the advisory and asset management space, while marking 2021 as a year of rapid M&A action that will almost certainly set a new record. 

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News emerged Tuesday that the private equity (PE) firms GTCR and Reverence Capital Partners will acquire Wells Fargo Asset Management (WFAM) in a multifaceted deal valued at $2.1 billion. 

Technically speaking, GTCR and Reverence Capital have signed a definitive agreement to acquire Wells Fargo Asset Management from the broader Wells Fargo & Co. business. The deal means that GTCR and Reverence Capital will also acquire Wells Fargo Bank’s North American-based business of serving as trustee to its collective investment trusts (CITs) and all related WFAM legal entities.

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According to announcements by the PE firms and Wells Fargo & Co., the transaction is expected to close in the second half of this year, subject to customary closing conditions. As part of the transaction, Wells Fargo & Co. will own a 9.9% equity interest and will continue to serve as “an important client and distribution partner.”

Adviser readers may recall that, last year, GTCR made a minority investment in CAPTRUST, demonstrating what was already a sizable and growing interest among PE firms in entering the retirement plan advisory and asset management marketplace. According to an analysis published by Axial, a firm that links private equity investors and business seeking capital, it has become increasingly prevalent for established entities across industries and economic sectors to sell a minority or majority stake to a PE firm.

The model offers benefits to both owners and acquirers, the analysis says, noting that, in 2017, private equity investors closed on more than 1,000 deals worth about $69 billion—an all-time high. Deal volumes have since remained near that high-water mark, according to Axial.

For its part, GTCR is a private equity firm mainly focused on leveraged buyouts, leveraged recapitalizations, growth capital and roll-up transactions. Since 1980, GTCR has invested more than $15 billion in over 200 companies. On its website, Reverence Capital Partners says its focus is on “a broad spectrum of middle-market financial services companies.” Its current portfolio already includes Russell Investments and Advisor Group.

“We invest in leading financial services companies and collaborate with management to drive long-term success,” the Reverence Capital website says. “We target control and influence-oriented minority investments, but remain flexible on the form and structure of the ultimate investment.”

According to various statements issued by the parties in this latest deal, Nico Marais, WFAM’s CEO since June 2019, will remain in his position. He and his leadership team will continue to oversee the daily business operations, while Joseph Sullivan, former chairman and CEO of Legg Mason, will be appointed as executive chairman of the board of the new company operating under GTCR and Reverence Capital.

“This transaction represents a significant milestone in the growth and evolution of our firm,” Marais says. “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, says his firm has “tremendous conviction in the caliber and capabilities of the management professionals and leadership team [at WFAM],” while Milton Berlinski, co-founder and managing partner of Reverence Capital, says the goal here is to “create an independent company that will grow over the long term and further enhance its innovative products and creative solutions for its clients.” He adds that 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.”

In their joint statement announcing the deal, GTCR and Reverence Capital say they are committed to market-based compensation and incentive structures that align the employees’ interests with the success of the firm. The firms say this approach is “expected to contribute to the ongoing retention of high-caliber portfolio managers and investment professionals.”

While different in many of its most salient details, news of this transaction calls to mind last year’s acquisition of Legg Mason by Franklin Templeton, as well as the largest financial services M&A transaction of 2018—Invesco’s acquisition of OppenheimerFunds from MassMutual, which clocked in as a $5.7 billion stock deal. Important to note, MassMutual did not exit the asset management space. Instead, it became the largest shareholder in a firm managing more than $1 trillion.

Products February 22, 2021

Prudential Expands Financial Wellness Offering to Include Caregiving Resources

The COVID-19 pandemic has added to the burden many caregivers bear.

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Prudential says recent studies have shown more than 15% of American workers are providing ongoing care for a chronically ill, disabled or elderly person, and one in four women are considering downshifting their careers or leaving the workforce because of child care and other challenges due to COVID-19.

The firm says the responsibilities these caregivers bear have been heightened during the pandemic, accelerating mental health and workplace productivity issues.

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As a result, Prudential is partnering with Wellthy, a provider in the caregiving space, to incorporate its suite of digital and concierge caregiving services into Prudential’s financial wellness offering.

Wellthy’s digital caregiving tools—such as educational content, digital care plan creation, storage of digital caregiving documents, access to a shared calendar to track appointments and the ability to establish a group caregiving discussion—will all be included in Prudential’s financial wellness offering.  It will also include Wellthy’s concierge services that provide hands-on support to help relieve caregivers of their burden and save them hours every week.

Employers will have the option to pay or enable their employees to pay for a dedicated care coordinator to help individuals manage the logistical and administrative tasks of caring for loved ones. This includes sourcing and vetting in-home aides and child care providers, evaluating insurance coverage for home safety modifications, setting up meal delivery services, identifying in-network physical therapy providers, arranging transportation to and from appointments, setting up calendars for appointment management, assisting with financial claims and billing support, and researching local elder care attorneys who specialize in estate planning.

“The COVID-19 pandemic has blurred the lines between work and home,” says Judy Dougherty, head of enterprise capabilities at Prudential Financial. “It has pushed many employees into multiple and sometimes new caregiving roles that impact their ability to balance work, home and the needs of their loved ones. This balancing act is creating additional pressure on an already challenged caregiving system. The benefits of Wellthy’s service are lower stress and improved productivity by assisting with some administrative and logistical tasks associated with caregiving.”

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