Banco Santander agrees to buy back asset management unit stake

Banco Santander, Spain's largest lender, agreed to buy back the 50% stake in an asset management unit it sold to buyout firms three years ago.

The company agreed to acquire the stake it sold to Warburg Pincus and General Atlantic and become sole owner of Santander Asset Management, it said in a regulatory filing Wednesday, without commenting on the price of the deal. The buyout firms purchased the holding in 2013 in a deal that valued the entire business at €2.05 billion ($2.2 billion).

The buyout firms each made a return of about 30% on the deal, a person familiar with the matter said.

Santander, Warburg Pincus and General Atlantic also agreed to explore options for a sale of their stake in Allfunds Bank, including a sale or an initial public offering, the company said in the filing. Santander and the two buyout firms own 50% of Allfunds Bank. Italy's Intesa Sanpaolo, which owns the rest, is also exploring a sale, the company said separately.

Allfunds could be valued at about €2 billion, people familiar with the plans said last month. Santander created Allfunds in 2000 to help financial institutions get access to so-called open architecture funds.

Santander Asset Management oversees €170 billion in assets under management and contributes €1.1 billion of annual fee income to the group, Santander said in the filing. The unit has more than 700 employees and does business in countries including Spain, Brazil, the U.K. and Germany, according to its website.

In July, Santander, Italy's UniCredit and the private equity funds called off talks to combine their asset management units in a transaction that would have valued the combined entity at about €5.4 billion.

The Spanish lender estimates the transaction will contribute more than 1% to earnings per share in 2018 and will have a negative impact on its core equity tier one of about 11 basis points. The deal is subject to regulatory approvals, Santander said.