Wells Fargo (WFC) To Divest Majority Interest In Eastdil
Zacks Investment Research | Jun 14, 2019 08:44AM ET
Earlier this week, Wells Fargo & Company (NYSE:WFC) (NYSE:C) announced plans to divest its private real estate investment banking division, Eastdil Secured. Though terms of the deal were not disclosed, the company will retain a minority ownership interest in Eastdil. The transaction is expected to close in fourth-quarter 2019.
Eastdil’s management is reclaiming ownership in the firm, in partnership with Guggenheim Investments clients and Singaporean sovereign wealth fund Temasek Holdings.
Post-sale, Wells Fargo will retain the public market real estate investment bankers of Eastdil, which will form the Real Estate, Gaming, Lodoging, and Leisure (“REGAL”) industry coverage group within Corporate & Investment Banking.
Through REGAL, Wells Fargo will provide a full range of investment banking and capital markets services, including advisory solutions on mergers and acquisition, debt and equity origination and structuring. Also, Wells Fargo disclosed that REGAL will continue its long-standing partnership with Wells Fargo’s Commercial Real Estate group.
“This newly dedicated Real Estate, Gaming, Lodging, and Leisure investment banking coverage group will leverage partnerships across the bank, with a deep pool of talent and expertise, to serve clients in these key industries and their complex financial needs,” said Rob Engel, co-head of Wells Fargo Corporate & Investment Banking.
In April 2019, Wells Fargo had announced that it will divest the Institutional Retirement & Trust business to Principal Financial Group (NASDAQ:PFG) based in Des Moines, IA, for $1.2 billion.
Wells Fargo’s efforts to offload unprofitable businesses bode well. Also, ongoing investment in the businesses to enhance compliance and risk management capability encourages us. However, post breakout of the sales scandal, Wells Fargo continues to suffer from several sanctions, including a cap imposed by the Federal Reserve on asset growth in early 2018.
In six months’ time, shares of Wells Fargo have lost 2.9% against 9% growth recorded by the Zacks Investment Research
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