U.S. investment firms Warburg Pincus LLC and General Atlantic
LLC have agreed to buy a 50% stake in Banco Santander SA's (SAN,
SAN.MC) $198 billion asset-management arm, in a move that puts the
business on a path toward independence.
Santander said Thursday the deal values the business at about
$2.66 billion, and that it will reap a net capital gain of about
$910 million from the transaction. Precise terms of the deal
weren't disclosed, although people familiar with the matter said
the U.S. firms together are paying about $1.3 billion for their
shared stake.
The Spanish bank, which is the euro zone's largest by market
capitalization, said it is reorganizing its far-flung fund managers
within a global holding company, of which the U.S. firms will own
half.
The deal follows a similar blueprint to a pact the Spanish bank
formed in 2011 with Warburg Pincus, KKR & Co. (KKR) and
Centerbridge Partners LP, who together paid about $1 billion for a
25% stake in Santander's U.S. consumer loan business. Dallas-based
Santander Consumer USA is now considering an initial public
offering of the business and may seek a value of as much as $6
billion, people familiar with the matter have said.
An IPO of the asset management business could also be in the
future, though there are no immediate plans to do so, according to
people familiar with the matter.
In recent years several asset managers have been spun out of
large banks.
Warburg, for instance, bought a stake in Citigroup Inc.'s (C)
Primerica Inc., helping the bank spin off its life insurance and
mutual-fund business into a publicly traded company in 2010. In
February, private-equity firm Carlyle Group LP (CG) and TCW Group
Inc. employees acquired the Los Angeles asset manager from French
bank Societe Generale SA (SCGLY, GLE.FR). Carlyle plans to
eventually sell TCW or take it public.
Independence of asset managers can allow for greater
entrepreneurial freedom and higher pay for employees than if they
work within the structure of larger financial institutions.
Meanwhile, particularly for European banks, selling asset
management arms can help banks satisfy capital requirements by
raising cash and reducing liabilities.
Santander put the asset management business up for sale in 2008
before pulling the plug on the process at the height of the
financial crisis. The business manages mutual funds, pension funds
and other investment vehicles in 11 countries across Europe and
Latin America, according to the bank's website. In the last year
its assets under management have risen to 152 billion euros ($197.6
billion) from EUR143 billion ($183.9 billion), according to the
bank.
Much of its growth has come from fast-growing Latin America,
where it has about 46% of its assets under management, according to
the bank. Santander has the No. 2 market position in both Argentina
and Chile, while ranking third and seventh among asset managers in
Mexico and Brazil, respectively, according to the bank.
General Atlantic has been acquiring stakes in South American
wealth managers. In February the firm paid $171 million for a
minority stake in Brazil's XP Investimentos, a broker-dealer and
investment advisor, and in late 2011 it paid $300 million for a
piece of Colombian investment firm Grupo Sura Asset Management.
Write to Ryan Dezember at ryan.dezember@wsj.com
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