Wells Fargo Investment Institute, Inc., (WFII), the registered investment advisor and wholly owned subsidiary of Wells Fargo WFC recently announced that it will divest its Global Alternative Investments (GAI) Feeder Fund Platform to a financial-technology firm, iCapital Network, in an effort to simplify operations and provide innovative products to the bank’s clients. Financial terms of the deal, which is expected to close in second-half 2020, remain undisclosed.
Additionally, this Wall Street biggie will become the latest strategic investor by joining the group of wealth and asset managers that has made strategic investments in iCapital.
The Wells Fargo GAI Feeder Fund Platform collects client money to invest in varied alternative solutions, including private equity, private debt, hedge funds, private real estate, and direct private investments.
“We are pleased to partner with iCapital to deliver alternative investments to enhance the experience for our advisors and clients,” said Darrell Cronk, president of WFII. “This transaction will allow us to continue to provide innovative alternative investment solutions to our clients as well as upgrade the overall platform and launch new offerings,” Cronk added further.
As part of the deal terms, the fund portfolio will be supported by the transitioning team for the continuation of services to clients. Additionally, iCapital will offer positions to team of Wells Fargo staff members, who, at present, support feeder fund operations businesses.
Wells Fargo’s partnership with iCapital is aimed at offering the best-in-class solution to its clients with innovative alternative investments. With the enhanced technology and efficiency of iCapital, the clients will continue to receive Wells Fargo’s current existing investment services including upfront and ongoing investment due diligence, product selection, investment monitoring, platform management, product support, and education.
For iCapital, the latest deal further strengthens its relationship with Wall Street. In 2017, it had acquired a U.S. private equity access fund platform from Deutsche Bank AG’s DB asset manager. Further, the firm has partnered with JPMorgan JPM and Morgan Stanley MS, along with a few other financial entities over the years.
Wells Fargo has undertaken several such divestiture measures over the years to focus on its core operations, improve efficiency and strengthen the balance sheet. These have resulted in significant cost savings for the bank.
Shares of Wells Fargo have gained 3.9% in the last three months compared with 23.1% growth registered by the industry.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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