Santander has agreed a €2.05bn (£1.76bn) deal to sell half of its asset management business to private equity groups Warburg Pincus and General Atlantic.
Santander Asset Management currently manages €152bn extending primarily across Europe and Latin America. The transaction is expected to be completed by the end of the year, generating a net capital gain of €700m for Grupo Santander.
As part of the deal, Warburg Pincus and General Atlantic will have a 50 per cent stake in a holding company that will integrate Santander Asset Management’s 11 asset management companies, primarily in Europe and Latin America.
The remaining 50 per cent of the bank’s asset management arm will be owned by Grupo Santander.
Warburg Pincus is a leading global private equity firm with more than $40bn assets under management. It is currently Banco Santander’s partner in Santander Consumer USA, the group’s consumer finance unit in the US. General Atlantic is a global growth equity firm that manages upwards of $17bn.
Santander has confirmed it will continue to distribute products managed by Santander Asset Management within the countries that the group has an existing retail network.
It will also look to expand the distribution of its products and services beyond the Banco Santander branch network at an international level.
The new company plans to broaden its asset management unit within the institutional market globally, with the aim of doubling AUM in five years and participate in the consolidation process taking place in the industry.
SAM chief executive officer chief executive officer Juan Alcaraz says: “This transaction will give Santander Asset Management a broader international profile and provide excellent opportunities for growth.”
Chelsea Financial managing director McDermott says that the sale of the asset management business could be good for its investors, who currently have to deal with expensive and poorly performing funds.
He says: “The Portfolio range of funds is expensive with a maximum 7 per cent initial charge showing on the KIIDS, so investors may have been paying over the odds for some badly performing funds too.
“I think selling the fund management arm may will be to the benefit of many of their investors.”