San Francisco-based Wells Fargo & Co. is considering a sale of its asset management unit, which has pushed a shortlist of rival firms, including Goldman Sachs Group Inc. and J.P. Morgan Chase & Co., to the forefront as potential buyers for the $578 billion manager.
In the past few months, Wells Fargo has been approached by multiple special purpose acquisition companies, or SPACs, regarding selling its asset management business, an anonymous source told Pensions & Investments in October, noting that the firm had so far rejected the proposals.
On Oct. 22, Reuters reported that the bank was exploring a sale of its asset management business, citing people familiar with the matter. Analysts at Keefe, Bruyette & Woods Inc. in October published a note in response to a news report on the sale speculation and potential suitors for the Wells Fargo unit.
"A sale of the investment management business would be in line with the ongoing strategic review that the company is doing and we would not rule out a sale, but the financial impact could be muted and potential buyers could be few," said the note, co-authored by analysts Brian Kleinhanzl and Michael Brown.
New York-based Goldman Sachs was mentioned as an attractive buyer should Wells sell its asset management business.
"The pool of potential buyers may be small since smaller asset managers may not be able to do a large deal given (Wells') AUM scale, and larger managers may not be interested to do a deal in order to simply obtain cost (savings) and increase scale but also increase execution risk," the analyst note said. "We would note that one potential buyer could be Goldman Sachs as the company is looking to grow asset management and also could look to sell additional products to (Wells') wealth management business as a strategic partnership."
On Oct. 23, Mr. Kleinhanzl said that J.P. Morgan Chase, New York, could also make sense as a potential buyer should a deal come to pass.
"There have been plenty of large banks that have talked about their ability to consolidate in the asset management space. That includes Goldman Sachs and J.P. Morgan, and I would expect those types of companies to look if (Wells' asset management business) was for sale," he said.
Spokesmen at Wells Fargo and Goldman Sachs declined to comment on the matter, as did a spokeswoman at J.P. Morgan.
Goldman Sachs' asset, consumer and wealth management units had $2.04 trillion in assets under supervision as of Sept. 30, while J.P. Morgan's asset and wealth management unit had $2.6 trillion in AUM at the time.